Coronavirus: China’s road to economic recovery ‘slow, costly and bumpy’ despite new phase of Covid controls

Economists say while Beijing has taken a stride towards reopening, a full economic rebound is still a way off

EU Chamber of Commerce in China says Beijing wasted ‘at least one year’ in preparing for herd immunity

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Vice-Premier Sun Chunlan, who leads the country’s pandemic response, says China’s virus controls are entering a new phase. Photo: Bloomberg

Published: 6:30am, 2 Dec 2022Updated: 8:57am, 2 Dec 2022

A little over three years since the first known case of Covid-19 in China, Beijing has given the strongest signal yet it is winding down its hard-line zero-Covid policy – long seen as the key to full economic recovery.

Economists say while Beijing has taken a stride towards reopening, the path to recovery will be slow and bumpy as infections soar over the next few months.

On Wednesday, Vice-Premier Sun Chunlan, who leads the country’s pandemic response, said China’s virus control measures were entering a new phase as the nature of the virus weakens and vaccinations become more widespread, according to the state-backed Xinhua News Agency.

Noticeably, the report made no mention of the “dynamic zero-Covid policy” – a fixture in official narratives on pandemic control over the past year.

We caution that the path to ‘living with Covid’ may still be slow, costly and bumpy

Lu Ting

Though markets immediately welcomed the news, some analysts are striking a more cautious tone.

“We caution that the path to ‘living with Covid’ may still be slow, costly and bumpy,” said Lu Ting, chief China economist at Nomura. “Covid might be more infectious in winter, switching the narrative takes time and a surge of infections and disruptions may be inevitable.”

Lu said a real economic recovery, led by a rebound of domestic consumption, might only come when coronavirus infections start to plummet.