China in the grip of Covid lockdowns: will the world‘s second largest economy after the United States ever emerge from the quarantine imposed by the zero tolerance policy against the virus launched by the Beijing government, the so-called Zero Covid Policy?
How much longer will it be necessary to wait before the word “reopening” becomes reality in the country? According to Hui Shan, chief economist of the China division of the US giant Goldman Sachs, there is a 60% probability that China will reopen in April 2023, following the Communist Party Congress.
At the same time, Shan warned that “there is also a 30% probability of a reopening that will be brought forward”, but in a “forced” way, in a China that does not have an alternative plan to the lockdowns in managing the pandemic.
The economist explains that a forced exit from China’s Zero Covid policy could see government and local authorities reduce anti-Covid controls before the country is really ready to deal with an inevitable increase in infections.
The boom in infections and the absence of a “medical preparation” suitable for managing cases could at that point have effects on the manufacturing sector and on the country’s trade, also causing serious problems for the entire health system”.
At that point, many Chinese themselves could decide to remain confined to their homes, but at the same time the reopening would have already caused a large number of hospitalizations and deaths.
According to Goldman Sachs, such a scenario could translate into “a further downside risk” on the recovery of the economy.
Goldman Sachs had already forecast China’s GDP to grow by just 3% year-on-year for 2022, far below the Beijing government’s target of 5.5% economic expansion.
The markets today discount the news of the protests that erupted in China precisely against the Zero Covid Policy that Beijing continues to pursue.
Several demonstrations by Chinese citizens exasperated by the lockdown measures and the restrictions strengthened in recent days to stem the new wave of Covid.
In particular, in the last three days, reports an article on CNBC, several students have organized demonstrations at various universities; in general, people have poured into the streets of Beijing, Shanghai, Wuhan, Lanzhou, and other cities, according to videos that have been circulating on social media.
The demonstrations initially started from Urumqi, in Xinjiang, last Friday, following a fire that claimed 10 lives the day before in an area that had been under lockdown for months.
According to the protests, the checks launched by the local authorities to guarantee the isolation of the residents would have delayed the arrival of the firefighters, causing the death of ten people.
The anger of the Chinese is also explained by the fact that the restrictions of the Zero Covid Policy are continuing to weigh down the growth of the country’s economy, which is now facing a youth unemployment rate of around 20%.
Some videos show protesters calling for the resignation of Chinese President Xi Jinping and the Communist Party itself.
But the point, points out the Goldman Sachs economist, is “that there are gaps in the medical field, precisely where the virus has evolved to such a level that it has made the implementation of the zero Covid policy very expensive”.
In the current situation, in his opinion, the authorities will have to carefully evaluate the costs and benefits of a Zero Covid policy which is increasingly testing the patience of the inhabitants. But the relaxation of which, in the absence of medical expertise, would risk causing real chaos.