China’s Zero-COVID Policy Is Causing An Economic Crisis

In mid-May, I traveled from London to Slovenia to interview the Ukrainian men’s soccer team on their bid to reach November’s Qatar World Cup. It was a four-day assignment, requiring travel via train stations, airports, and taxi ranks—but at no point was I asked to show a negative COVID-19 test, my vaccination status, nor even to wear a facemask. It is rare that I have ever seen anyone wearing one. This includes elite athletes with whom I socialized daily. It was equally refreshing and disconcerting—as if Europe had forgotten that the pandemic had ever happened and was indeed still happening.

It was on this trip that a news alert flashed on my phone: China, on May 14, announced it was withdrawing from hosting the Asian Football Confederation Cup—the continent’s premier international soccer tournament—due to a COVID-19 outbreak that, on that same day, was responsible for only 65,000 cases and 45 deaths nationwide. That China is still wedded to a stringent zero-COVID policy focused on stamping out every infection, rather than mitigating severe illness and deaths, wasn’t a secret to anyone following the harsh lockdown endured by the 26 million residents of Shanghai, its biggest city, over the last two months. Still, it was surprising because Beijing, not too long ago, hosted the 2022 Winter Olympics without seeding a major outbreak and China’s leadership relishes in the prestige that accompanies these major sporting events. But what caught my eye most was the timing: the nixed tournament didn’t kick off until June 2023.

What it suggests is that China has no intention of following the West into a vaccine-powered “living with the virus” dynamic. That’s bad news for China’s own economy and for any diminishing hopes worldwide of avoiding a global recession. Over the last two decades, China has contributed a quarter of the rise in global GDP—in that time, the first quarter of 2020 was the only one when its economy did not expand. Today however, 200 million Chinese still live in poverty, which is a further problem for an economy that’s already struggling. Retail sales in April were 11% lower year-on-year, while housing sales—comprising over a fifth of GDP—plummeted 47% over the same period. The official data shows that the unemployment rate in 31 Chinese major cities has reached its highest level since 2018’s records were started. The growing tension between economic priorities, public health, and the environment in Shanghai is evident by scenes from May showing workers fighting off officials at the public health department at an Apple MacBook factory.

“Ordinary Chinese people have felt the heavy-handed authoritarianism of the Party in a much more direct and personal way than many people, especially young people, have before,” says Astrid Nordin, the Lau Chair of Chinese International Relations at Kings College London.

Learn more China, Isolated From the World, Is Now the Last Major Country Still Pursuing a ‘Zero COVID’ Strategy

China has had market reforms that began in the 1970s. Since then, China’s ruling Chinese Communist Party (CCP), has built its legitimacy on improving people’s lives. But over the last two years, President Xi Jinping has seized on China’s success conquering the virus as proof of the superiority of its political system over the West. Now, these two stories of success are in direct conflict. On May 25, Chinese Premier Li Keqiang held an emergency meeting with over 100,000 party members where he warned China’s current economic woes were in some ways greater than the initial impact of the pandemic in 2020 and indicated that the annual growth target of 5.5% was unobtainable.

“The economic crisis owing to draconian measures to control the outbreak really shows the mess, miscoordination, and miscalculations by leadership at the top,” says Valerie Tan, an analyst on Chinese elite politics for the Mercator Institute for China Studies in Berlin. “We’re finally seeing the full manifestation of this ideological turn by Xi Jinping.”

We don’t think Beijing will abandon its zero-COVID policies anytime soon. It’s especially sensitive for Xi as the 20th CCP Congress approaches in the fall, when the strongman is expected to assume a third five-year presidential term, ripping up the longstanding convention that leaders only serve two. The prospect of COVID-19 running amok while he takes this historic step won’t be countenanced. On May 5, the CCP’s Politburo’s standing committee, China’s apex political body, said zero-COVID was “determined by the nature and purpose of the Party,” thus expressly linking it with CCP legitimacy, while declaring that relaxing controls would lead to “massive numbers of infections, critical cases and deaths.”

Despite the ideological nature of China’s zero-COVID obsession, this grim prognosis is not hyperbole. According to a study published May 10 by researchers from Shanghai’s Fudan University, Indiana University, and the U.S. National Institutes of Health, relaxing COVID-19 restrictions in China could lead to 112 million cases and 1.5 million deaths in just three months. China is still not fully vaccination 100 million (or 38%) of its over-65 citizens. In semi-autonomous Hong Kong, a wave of the highly transmissible Omicron variant led to some of the world’s worst daily mortality rates in recent months, with 95% of those deaths in over-60s who hadn’t been fully vaccinated.

Learn more How Hong Kong Became China’s Biggest COVID-19 Problem

China has been a victim not only of its ability to stop the spread of transmissible viruses but also of backslapping propaganda. Older people who don’t want to travel to other countries felt no need to have their vaccines against the virus declared defeated by the state. Meanwhile, owing to a pernicious blend of national security and national pride, China has not approved any foreign vaccines, meaning it doesn’t have access to the most effective types, which are those based on mRNA technology. It isn’t always effective to use homegrown options.

It doesn’t really matter in a country where zero-COVID law is the only rule. Although the COVID-19 vaccines are not effective in eliminating transmission, they can slow down the spread of the disease and significantly reduce severity. However, that renders them incompatible with any zero-COVID strategy, which doesn’t differentiate between mild or severe cases, or those in young and old. This policy does not target sickness and deaths, but infections. “This is why it’s so political,” says Dr. Yanzhong Huang, senior fellow for global health at the New York City–based Council on Foreign Relations. “Unless they abandon their zero-COVID mindset there’s really no way out of this.” Little wonder even the WHO says that zero-COVID is unsustainable.

The Chinese public are wising up to this fact and complaints about the government’s handling of the pandemic have become common even on the nation’s heavily censored social media. The new official order has now been published: jingmoYou can either say it or keep silent. In other words, stop grumbling. During that May 5 Politburo standing committee meeting, Xi vowed to crack down on “all words and deeds that distort, doubt, and deny our epidemic prevention policies.” Ominously, China’s National Health Commission chief Ma Xiaowei wrote in CCP ideological journal Qiushi on May 16 that more “permanent” quarantine hospitals must be built and weekly testing “normalized.”

Not hosting the AFC Cup won’t do much damage to China’s global reputation. But rolling lockdowns, which are sending China’s factories screeching to a halt, with cascading detrimental effects all the way down global supply chains, will make commercial partners look elsewhere. In Shanghai, China’s biggest port responsible for one-fifth of the country’s international shipping, average waiting time for import containers was 12.9 days on May 12, up from 7.4 days compared to six weeks earlier, according to shipment tracker Project 44. A recent study by the U.S. Chamber of Commerce found that half of American firms in China delayed or decreased their investment in China because of lockdown measures.

Thanks to current measures, “China might be seen as a less reliable trading partner than previously,” says Nordin, of Kings College. “The question is how much less reliable than other possible alternatives?”

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