CHINA'S DYNAMIC ZERO-COVID POLICY

China is grappling with severe outbreaks of coronavirus in multiple provinces, the worst outbreak in the country since the virus first emerged in Wuhan. On 20^th March 2022, China reported more than 4,000 new infections, with most cases concentrated in Jilin, Fujian, Guangdong, and Liaoning. As the world emerges out of lockdowns and eases restrictions on travel and other activities, the entire province of Jilin and its 24 million residents are locked down along with industrial hubs in the south: Shenzhen and Dongguan. Meanwhile, cities like Shanghai haven’t declared lockdowns yet but resorted to temporary measures to limit travel and economic activity. As public health officials scramble to contain the virus, China’s dynamic zero-COVID policy is at risk of being undermined by the Omicron variant. Moreover, the lockdown of industrial hubs has already created supply disruptions and sparked fears of an economic slowdown in China. The new wave of infections has reignited a fierce debate about whether to coexist with the virus or stamp it out completely. For the Party and President Xi Jinping, the surge in infections is a test of resolve to stand by the zero-COVID policy that will either dent or enhance the Party’s credibility.

Gradual Progress: Zero-COVID to Co-existence

China’s dynamic zero-COVID policy was initiated in March 2020 when the pandemic started and it has been the guiding principle for managing outbreaks since then. The policy is a public health measure to control and suppress outbreaks of infection as quickly as possible through a range of instruments: mass testing, contact tracing, isolation and quarantines, restrictions on domestic and international travel, and lockdowns of entire cities. However, the term ‘zero-COVID’ is a misnomer and obscures a much more targeted approach Chinese provinces have adopted since 2021.

China’s response patterns to outbreaks have transitioned from one stage to the next since 2021, beginning with widespread preventative measures in January 2021 in anticipation of new infections during the Chinese New Year season. The restrictive measures were followed by high and low baseline prevention and control measures between March 2021 and October 2021 that eventually transitioned into targeted measures by the end of 2021. China continues to implement the zero-COVID policy through targeted responses, allowing provinces to enact measures based on the severity of the outbreaks.  Data from the Oxford COVID-19 Government Response Tracker (OxCGRT) reveals that the stringency of provincial-level responses to COVID-19 has not increased beyond the levels seen in January 2021. Underlining the flexibility of the policy, the head of China’s National Health Commission (NHC) COVID-19 task force, Liang Wannian, pointed out that the NHC is not capable of ensuring no new locally transmitted infections and instead, the focus is to stamp out local infection clusters as quickly as possible. Although the zero-COVID approach resembles public health measures adopted by China in the early stages of the outbreak, the implementation varies by province and severity of the outbreak. One important factor contributing to the feasibility of the policy across the country is the cooperation of the general public who have responded positively to the government’s incessant emphasis on the threat of the virus.

There are other signs that China appears to be modifying its approach to COVID outbreaks. For instance, the NHC altered quarantine and treatment rules so that mild cases would be isolated at centralised locations instead of at hospitals. Similarly, the criteria for a patient to be discharged from a quarantine facility has also been lowered. These developments happened after Premier Li Keqiang’s announcement at the recently concluded National People’s Congress that China would look to make its COVID strategy more scientific and targeted. Additionally, Zeng Guang, Chief Epidemiologist of the Chinese CDC stated in a post on his personal Weibo account, that Chinese and non- Chinese policies towards the virus would eventually converge. He maintained that China’s current zero-COVID policy would not last forever and that in the near future and at an appropriate time, China would unveil a Chinese-style roadmap for co-existence with the virus.

For now, the targeted approach at the regional level appears to have given way to a stringent lockdown in Jilin, where the surge of infections threatens to jeopardize the gains made by the zero-COVID policy. Since March 11, 9 million citizens of Changchun have only been allowed out of their homes once in two days to buy essential supplies, while only medical personnel and anti-epidemic workers are authorised to leave their homes. Meanwhile, in Shenzhen and Dongguan, the restrictions imposed were less severe and are already being eased gradually.

Justifications of Zero-Covid and Consequences of Mismanagement

Chinese government officials have offered several justifications for the zero-COVID policy and the return of stringent public health measures. The policy is justified based on China’s comparatively fragile healthcare system, which has only 4 ICU beds per person compared to USA’s 26 and Germany’s 34. China also has a large old-age population, with only 50% of its citizens above 80 years fully vaccinated. A study by China’s Center for Disease Control claims that the country could have as many as 600,000 daily cases if it were to follow the approach of the US, UK, and European countries. The zero-COVID policy is also uniquely suited to China’s one-party state, which is able to mobilise resources and capacities in accordance with the clear signalling of the top leadership that has incentivised and punished local officials for their handling of outbreaks. 

Most recently, eight officials in the public health and public security departments of the Futian district of Shenzhen were dismissed for dereliction of duty. Similarly, Party Secretaries of Inner Mongolia’s Ejina banner and Hebei were also removed from their posts for failing to properly manage the outbreak of Omicron in their provinces. The management of the outbreaks is also a test of loyalty to President Xi Jinping and his policy initiatives. The zero-COVID policy allows President Xi to identify officials that appear reluctant to implement his policy directives and remove them from contention for higher office. By punishing party and government officials that fail to control outbreaks, Xi is communicating his intention to sustain the zero-COVID policy and enhancing his popular appeal. How these outbreaks are managed at the local and central levels will influence the atmospherics of the Party Congress in October 2022.

Economic Repercussions

The latest surge in cases threatens the recovery of China’s national economy and global supply chains. For the domestic economy, production halts in Dongguan and Shenzhen risk dampening Guangdong’s GDP and export capacity. The province provided about 24% of China’s exports in 2020 and Dongguan was the fifth largest contributor to China’s GDP among cities of the same size. The disruption of economic activity and transportation networks in Shenzhen and Shanghai, China’s number 1 and number 3 biggest cities in terms of GDP output, will also extract significant economic costs. Similarly, the suspension of work at production plants in the Pearl River Delta and the Yangtze River Delta threatens the supply chains of everything from electronics products to consumer goods. 

At some of China’s biggest ports, the backlog of shipping vessels has increased, adding delays to already disrupted supply chains. For instance, 72 vessels were spotted off Qingdao port on March 14, almost twice the amount of backlogged ships in February. There is a similar backlog of ships at other ports like Shanghai, Ningbo, and Zhoushan while the backlog at Shenzhen and Hong Kong has eased in recent weeks. These backlogs at ports and other parts of China are expected to increase freight rates and exacerbate production delays. These developments follow the announcement by Chinese government officials of better-than-expected growth in retail sales, fixed asset investment and industrial production for January and February. The economic momentum during the Winter Games and the Lunar New Year that boosted domestic demand is now at risk of being eroded due to the sporadic outbreak of infections around the country. The recovery of China’s national economy is also complicated by the volatility in the international environment due to the Russia-Ukraine conflict.

Conclusion

The latest wave of infections and the zero-COVID policy in China have several implications for the economic and political future of the country and party. The sustained implementation of the zero-COVID policy has restricted production activity and dampened consumption demand following a boost in economic activity in the early months of 2022. The outbreaks highlight the limitations of the zero-COVID policy as Chinese government officials double down to sustain their policy efforts. As party and government officials scramble to prevent local outbreaks, they are also under pressure to maintain economic growth in a year of vital importance for the Party and President Xi Jinping. How the party navigates this wave of outbreaks and evolves its current zero-COVID policy will influence the expectations and outcomes of President Xi Jinping’s decision to remain at the core of China’s top leadership.