Why the world needs China’s Covid-zero policy

Over the past two years, China's zero-tolerance policy of lockdowns, mass testing, and strict border quarantines for Covid-19 has prevented a huge number of deaths at home and ensured that everything from iPhones and Teslas to fertilizer and car parts continues to flow to the rest of the world.

If consumers and businesses want to continue to buy goods made in China without having to endure shortages and further price hikes, they should want China to stick with its "Covid-zero" policy, as President Xi Jinping does.

Yet that's not the message you hear outside of China. Criticism of Beijing's determination to quash every outbreak is increasing—criticism that emphasizes the damage to China's economy, the risks posed to global supply chains, and even the threat to Olympic athletes' human rights.

Gita Gopinath, a senior official at the International Monetary Fund, told media last month that authorities need to "recalibrate" their response to Covid outbreaks, warning the disruptions caused by more lockdowns could have "very important consequences for global supply chains." A Goldman Sachs report from January posited that if multiple provinces were hit with the omicron variant this winter and the government imposed a national lockdown, growth in China could plunge to 1.5% this year, the lowest since 1976.

Those concerns are real—there are serious economic, fiscal, and human costs from the attempt to halt the spread of Covid within China, and these could get worse if outbreaks continue to spread.

But in truth, these risks to both China and the rest of the world pale next to the human and economic toll if the country were to abandon Covid zero, allowing the virus to spread more or less unchecked among a population of 1.4 billion people that, despite an impressive 87% vaccination rate, are highly vulnerable.

A surge in infections after China reopened might be worse than in other countries currently battling the omicron variant. Its own vaccines have been shown to be less effective than the mRNA shots used elsewhere, and its success so far in protecting almost everyone from infection means the nation faces a "huge immunity gap," according to Yanzhong Huang, a senior fellow for global health at the Council on Foreign Relations.

China would face a "colossal outbreak" on a scale beyond anything any other country has yet seen, with more than 630,000 infections a day if it were to reopen in a similar manner to the US, according to modeling by researchers at Peking University. Even if deaths could be kept to the low levels achieved in South Korea or Japan, China would still likely see many more people die than the 4,636 official Covid deaths over the past two years. (In the US, which has less than one-quarter the population, the number recently surpassed 900,000.)

China has had repeated outbreaks since the virus first appeared in Wuhan, but these have all been quashed by government controls like the recent lockdown of the city of Xi'an, which kept 13 million people indoors for about a month through late January. Repeated rounds of mass testing and contact tracing have so far been enough to control recent outbreaks of the omicron variant in Beijing, Tianjin, Hangzhou, and elsewhere.

While these restrictions have led to temporary shutdowns of ports and factories, the country's industries have so far come through the pandemic remarkably unscathed. Exports hit records in 2020 and then again in 2021, and if it had not been for that constant stream of goods, prices of US imports would have risen even faster, and shortages of products, both essential and luxury, would have been even more pronounced.

China's Exports

That steady supply may be difficult to maintain when China does eventually reopen its borders and gets rid of internal Covid controls. Australia, which had for a long time maintained a Covid-zero policy like China's, suffered a spike in infections and deaths in January after most of the country ended lockdowns and it scrapped mandatory border quarantine for everyone entering the country.

At whatever point China looks to do the same, unless the virus has mutated into something even less harmful than the omicron variant, the reaction of the Chinese is likely to be similar to that of Australians: People will stay home to avoid getting sick, or because they're ill or have been in close contact with someone who is.

In the early days of the pandemic in 2020, many Chinese chose to isolate, even without the government forcing them to. If infections and deaths were to spike across the nation, that would likely happen again, especially if hospitals became overrun with the sick and dying.

In that event, the blow to supply chains would be worse than anything seen so far during the pandemic. Globally, there's no ripple effect from supermarkets in Sydney having to limit purchases or shut temporarily because they can't get workers; if absenteeism forced factories and ports across China to slow or shut down, that would feel like a giant wave crashing.

Even if only temporary, shortages of a broad range of goods would push up already elevated inflation and drag on a global economic recovery that's looking more fragile than it did before the advent of omicron. (The IMF recently downgraded its forecast for world growth in 2022 to 4.4%, from 4.9%.)

Although omicron has breached Beijing's defenses, it's seen as a certainty by many that the policy of trying to contain Covid will continue through 2022 and even beyond. The government acknowledges the policy has costs, but still believes these are outweighed by the benefits, according to a recent IMF report.

Even access to better vaccines might not be enough to push China to change track because relying on shots alone isn't effective at stopping infections as mutations can evade immunity, according to Wu Zunyou, the chief epidemiologist at the Chinese Center for Disease Control and Prevention.

"We previously thought Covid-19 could be basically contained through vaccines, but now it seems that there's no simple method to control it except with comprehensive measures," he told the state-backed Global Times newspaper recently, adding that China will continue its current policies as long as imported infections have the ability to trigger large-scale outbreaks.

Yet as the past two years have demonstrated, temporary and isolated shutdowns don't mean manufacturers and exporters stop working and goods don't get onto ships. So the longer China sticks with Covid zero, the better it'll be for the rest of the world.

Disclaimer: This article first appeared on Bloomberg, and is published by special syndication arrangement.