Calls have increased for Beijing to clearly state its priorities regarding the nation’s conflicting coronavirus management and economic growth goals, with people’s livelihoods coming under mounting pressure amid an estimate that China has already lost about 3 percentage points worth of economic growth this year. Leading academics and advisers stressed the importance of clarity at a time when the world’s second-largest economy is facing a new round of coronavirus disruptions, with daily infections having already jumped to more than 40,000. Yao Yang, a professor and dean at the National School of Development and director of the China Centre for Economic Research at Peking University, estimates that China’s economy – valued at 114 trillion yuan (US$16 trillion) in 2021 – has already shed more than 3 trillion yuan so far this year by prioritising its zero-Covid policy over economic development. “For local governments, the usual thinking must be that epidemic prevention comes first. If it isn’t properly done, they need to take responsibility. But if the economy is not doing well, they are not held accountable as much,” Yao said during a Peking University seminar on China’s economic outlook earlier this month, according to a transcript published on Sunday. “So, on balance, local governments will inevitably continue to prioritise epidemic prevention.” Yao has been advocating for Beijing to ease its zero-Covid policy to minimise its economic impact, and he has also urged local governments to “consider the feelings of ordinary people more” and use more “targeted measures when it comes to Covid control”. “Against this backdrop, I think the central government should make a clear statement – not asking for both – and should clarify the priority of work,” Yao added. “Only then can our economy be expected to recover quickly in the coming months.” Protests against China’s controls broke out in Shanghai, other major cities and university campuses over the weekend as lockdowns returned. The protests were largely sparked by a deadly residential fire in Urumqi, the capital of the Xinjiang Uygur autonomous region, which killed 10 people and injured nine others last week. Anti-Covid lockdown protests flare across China after deadly Urumqi fire Martin Petch, vice-president at Moody’s Investors Service, expected that the protests relating to the containment measures would dissipate relatively quickly. “However, they have the potential to be credit negative if they are sustained and produce a more forceful response by the authorities. Though this is not our base case, this would lead to an increased level of uncertainty over the degree of political risk in China, spilling over into damaged confidence and hence consumption in an already weakened economy,” Petch said. Markets and investment group CLSA said last week that the number of cities that have recorded infections accounted for 68.9 per cent of China’s gross domestic product (GDP), reaching a new year-to-date high. Local governments have struggled to strike a balance between bringing the virus under control and following the State Council’s 20-point plan, which mandates a more targeted approach that avoids large-scale lockdowns. A full-fledged policy pivot is not in our baseline, as we believe many restrictions will remain in place [in China] Andrew Fennell, Fitch Ratings “China’s zero-Covid policies – and the mobility restrictions required to implement them – have weighed heavily on the economy and elevated social tensions,” said Andrew Fennell, the head of Greater China sovereigns at Fitch Ratings. “We expect the authorities will relax the most restrictive elements of current anti-epidemic measures in 2023, such as citywide lockdowns, which have contributed most directly to downside growth pressures. “However, a full-fledged policy pivot is not in our baseline, as we believe many restrictions will remain in place due to China’s limited levels of naturally acquired immunity and relatively low Covid-19 booster coverage for the most vulnerable groups of society.” China’s economy grew by 3.9 per cent in the third quarter , year on year, after growing by just 0.4 per cent in the second quarter. But with downside risks to the economy in the fourth quarter, Goldman Sachs expects China’s economy to grow by 3 per cent this year, overall. “The central government may soon need to choose between more lockdowns and more Covid outbreaks. The current situation imposes further downside risk to our below-consensus quarter GDP forecast,” Goldman Sachs said on Sunday. A series of surveys by Peking University also showed that China’s unemployment situation was deteriorating even as GDP picked up. In an attempt to steady the economy this year, Beijing has boosted its fixed-asset investment in the form of debt-fuelled infrastructure spending, but former central bank adviser Huang Yiping said the government should also take into account the importance of consumer confidence. “I think consumption should account for a certain proportion of China’s economy,” Huang said at the Caixin Summit earlier this month. “Right now, consumption is affected by the pandemic, which has put limits on mobility, social interactions and economic activities … and it is [weak] also because of an uncertainty in expectations [concerning policy changes],” added Huang, who has in the past urged the government to ease its coronavirus control policy. How reliable is China’s unemployment data, and how is it calculated? Wang Yong, director of the Centre for International Political Economy at Peking University, has also urged policymakers to review the sustainability of control measures. To press on with the current policy would require a large number of resources from local governments, Wang said on his Weibo social media account on Saturday. He also said that recent violent clashes between workers and security forces at the world’s largest iPhone factory – operated by Foxconn Technology Group in the central city of Zhengzhou – could trigger the relocation of manufacturing, while protests could happen again if strict measures remain. “Policymakers and the public should get rid of the fear of the virus, and believe [if] neighbouring countries including South Korea, Vietnam and India can get on with reopening, our country’s system and preparations [can do even better],” Wang said.