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Coronavirus China
EconomyChina Economy

China’s zero-Covid strategy risks further economic disruption, report warns

  • China is sticking with its zero-tolerance approach against the coronavirus despite the backlash against the prolonged one-size-fits-all measures
  • US-based consultancy firm Eurasia Group believes the policy is likely to remain for the remainder of 2022 despite warnings of social and economic damage

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China is still unlikely to pivot away from a very low tolerance for virus cases for the rest of 2022, according to US-based consultancy firm Eurasia Group. Photo: Reuters
Ji Siqi

China’s continuation with its zero-tolerance approach against the coronavirus will deepen consumption woes and supply chain risks, as well as set back the nation’s efforts to deleverage and rebalance its economy, according to a report.

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Even though authorities are making efforts to fine-tune containment policies, shifting from massive lockdowns to more targeted, small-scale closures in big cities, the country is still unlikely to pivot away from a very low tolerance for virus cases for the rest of 2022, according to US-based consultancy firm Eurasia Group.

“Chinese policymakers face a risk that if they really do relax the policies significantly, there could be a major explosion in cases,” said Michael Hirson, practice head of China and Northeast Asia at Eurasia Group.

He cited a low level of acquired immunity within the population and the less effective home-grown vaccines against the Omicron variant.

The bottom line is that the leadership has a tremendous amount at stake politically in ensuring that there are no major setbacks with Covid before the 20th party congress
Michael Hirson

“The bottom line is that the leadership has a tremendous amount at stake politically in ensuring that there are no major setbacks with Covid before the 20th party congress,” Hirson added.

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