Reasons, Concerns and Global Economic Impact

  • More than two years after the pandemic, parts of China are still in and out of COVID-19 lockdowns.
  • Prolonged restrictions have hit China’s economy and spilled over to the rest of the world.
  • China faces reluctance to vaccinate the elderly and lack of a domestic mRNA vaccine to emerge from its COVID-19 stance.

More than two years after the pandemic, parts of China are still in and out of COVID-19 lockdowns.

In recent months, traders and bankers in Shanghai have been sleeping in their offices to keep working during the lockdown. Factory workers have been told to live and work on-site intermittently if cases spike. Locked down the resort island of Hainan, stranded 80,000 tourists.

China’s exit from the long pandemic lockdown has troubled economists and policymakers. China is the world’s second-largest economy and manufacturing powerhouse, so investors and businesses are concerned about the impact continued regulation will have on economic activity.

J. Stephen Morrison, Scott Kennedy wrote: Yanzhong Huang of the Center for Strategic and International Studies, a US-based think tank, June 27.

Protracted restrictions are already hurting the Chinese economy. The leaders told government officials in late July that they could miss the 5.5% economic growth target for this year, Bloomberg reported, citing people familiar with the matter. Meanwhile, the International Monetary Fund in July lowered its 2022 global economic growth forecast to 3.2%. This was lower than his original forecast of 3.6% in April, citing lockdowns in China as a factor.

China will likely lift its zero-Covid approach “well before” 2023, according to Eurasia Group, with aggressive testing and lockdowns continuing to stem the public health crisis, but the economy Slow down without danger.

Here are two reasons why China is reluctant to abandon its Corona Zero Policy and what it takes to finally get there.

1. Older people in China continue to be hesitant to get vaccinated

Vaccine coverage in China is high, with almost 90% of the population fully vaccinated, according to the Johns Hopkins Coronavirus Resource Center.

But immunization rates among the elderly lag behind the national average, with only 61% of those over the age of 80 being vaccinated, China’s National Health Commission said in an update in July. reporting. There are few reports explaining the reluctance to vaccinate among the elderly in China, but a study of 92 people in China, including those aged 60 and over, found that the reasons were safety, adverse reactions, and domestic Concerns about the low incidence of COVID-19 are included. In November 2021 he was published in Vaccines journal.

Also, China has yet to develop its own mRNA vaccine, which is hampering its exit from the pandemic. Most Chinese are vaccinated with inactivated vaccines.

In a bid to boost public confidence in a domestic vaccine, senior officials of China’s National Health Commission said in late July that all Chinese state and party leaders had been vaccinated against Covid-19, according to Reuters. He said he has been vaccinated with vaccines made in China.

Analysts at Eurasia Group wrote in a July 25 memo that “while vaccination of the elderly population will improve in the coming months, it will not be sufficient to eliminate overall health risks for the elderly population.” wrote.

2. Deploy technology to prepare for the next pandemic

China can import vaccines as a first aid measure, but experts say it is in the national interest to develop its own mRNA vaccine and need not rely on imports. It is also to ensure that technology is ready for the next trend.

Bo Zhuang, senior sovereign analyst at Boston-based investment management firm Loomis Sayles, told Insider:

“The Chinese government doesn’t need to subsidize companies that develop this technology from scratch the next time the pandemic strikes,” he told Insider.

He estimates that China will likely end its lockdown only after the Chinese New Year, which will be in late January 2023.

Beijing doesn’t need to change its narrative because it relies more on imported COVID-19 treatments than vaccines

Experts say China needs two things to start its long journey from zero to zero.

“Unlike vaccines, the Chinese government is much more willing to import treatments,” write analysts at Eurasia Group, led by Scott Rosenstein, special counsel for global health at the consulting firm.

The Chinese government hopes drugs like Pfizer’s Paxrobid Pill will treat COVID-19. Especially since early government messages that cast doubt on the effectiveness of foreign vaccines are difficult to reverse.

Eurasia analysts said, “This is probably because the Chinese government has characterized the development of homegrown vaccines as a demonstration of sophistication in the pharmaceutical industry, and the news media have repeatedly characterized foreign vaccines as inferior products. The cure is not hampered by similar governmental or public resistance.”

“Pivoting from zero Covid will likely require successful deployment of treatments,” analysts added. Data modeling by US and Chinese scientists in May 2022 paper That’s especially true because more than 1.5 million people could die in China if they abandon their zero-Covid policy without access to vaccinations and medicines, according to the report.

Even with a cure for the new coronavirus, China will need to launch a public messaging campaign to convince the Chinese public that health risks from both immunizations and treatments have decreased. . This is unlikely to happen until 2023, analysts at Eurasia Group said.

Given that the next meeting of parliamentarians and the Supreme Political Advisory Board (known as the ‘Two Sessions’) will take place in March 2023, the message is likely to be expedited only after this meeting. , they added.

Official messages suggest a long way from Covid-zero.

According to official records, President Xi Jinping said in June, “Even if there is a temporary impact on the economy, it will not endanger people’s lives and health, and we must especially protect the elderly and children.” .

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