Coronavirus: China’s zero-Covid policy pushes cash-strapped local governments to the brink

Name: Shanghai fighting its worst Covid-19 outbreak since start of the pandemic
Uploaded: 2022-03-19T04:00:17.000Z
Duration: 2 min 13 s
Description: Shanghai fighting its worst Covid-19 outbreak since start of the pandemic

China is clinging to a zero-tolerance approach to the pandemic that relies on stringent lockdowns, mass testing and quarantine in government facilities

But the cost of maintaining the strategy is growing and many local governments are struggling to balance debt control with strict virus prevention measures

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China is fighting its latest virus surge with stringent lockdowns, mass testing and quarantine in government facilities. Photo: AFP

Amanda Lee

Published: 12:00pm, 19 Mar 2022Updated: 3:39pm, 19 Mar 2022

Local governments in China are facing a growing financial burden to meet Beijing’s hardline zero-Covid strategy amid rising health care costs and efforts to control debt, analysts said.

China is battling its biggest virus surge in two years and numerous cities have imposed travel bans and lockdowns, including tech hub Shenzhen, which have shaken economic stability and global supply chains.

“The outbreak is currently the biggest macroeconomic event in China,” Tianfeng Securities, a China-based investment bank, said on Thursday.

“The current situation across the country is indeed severe, we can see the pressure on medical care and finances from the existing model. Globally, pandemic control policies are being adjusted, and the possibility of adjustment in China is also increasing.”

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Shanghai fighting its worst Covid-19 outbreak since start of the pandemic

Premier Li Keqiang has said the country’s zero-Covid policy will be fine-tuned to minimise disruptions to the economy, but there are no signs of it being abandoned, despite fierce debate among economists.

Shanghai, China’s international financial hub and logistics centre, has so far resisted a complete lockdown, urging its residents to work from home.

But some local governments have imposed strict containment measures, which analysts say may not be as effective in combating the highly transmissible Omicron strain. What’s more, mass testing is adding another financial burden to strained regional finances.