With China firmly on a zero-Covid trajectory, concerns are turning to ‘growth recession’ risks

Beijing’s handling of the coronavirus has vast implications on every facet of Chinese people’s lives, and on a world that has come to rely so heavily on China

Even as the government attempts to censor those who disagree with its Covid policies, fears of economic recession spark warnings and curb consumption

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Beijing’s unwavering zero-Covid strategy further came under fire last week, when the World Health Organization’s director general labelled it “unsustainable”. illustration by Lau Ka-kuen

Published: 12:00am, 18 May 2022Updated: 10:20am, 18 May 2022

Beijing’s steadfast adherence to rigid citywide lockdowns to combat the highly contagious Omicron coronavirus variant is gradually changing the narrative, with questions shifting from how far will the central government go, to how big of an economic hit the country can afford to take.

There are abundant suggestions in economic circles that the world’s second-largest economy is seeing its growth path undermined as Beijing prioritises saving lives at all costs.

And as top leadership attempts to shore up confidence, with repeated assurances that it has the necessary tools and plans in place to counter headwinds, analysts are warning about what they see as severe consequences ahead.

Some are pointing to rising instability among the nation’s most vulnerable groups. Others warn of a “growth recession” – very slow economic growth accompanied by rising unemployment.

And some say China is at risk of a double-dip recession, similar to what the US saw in the early 1980s – a recession, followed by expansion, followed by recession again.

Beijing’s unwavering zero-Covid strategy further came under fire last week, when the World Health Organization’s director general labelled it “unsustainable”.