China’s policy shift looks like a massive gamble

Beijing rolls out a new Covid action plan after mass protests and a tanking economy shake the ruling Communist Party

Nationwide protests and economic challenges have forced China into a “zero-Covid” U-turn

On Wednesday, the National Health Commission announced that relentless restrictions would be scrapped or modified to pacify public anger and resuscitate an ailing economy.

The decision followed mass demonstrations on the streets and university campuses of major cities last month, shaking the upper echelons of the ruling Communist Party.

But the move is fraught with risks that threaten to spark an unparalleled “winter wave” of Covid infections and a death toll of “one million Chinese people,” the Financial Times reported.

“[It] would rapidly overwhelm China’s healthcare system, according to projections by Wigram Capital Advisors, an Asia-focused macroeconomic advisory group that has provided modeling to governments during the pandemic,” the FT said.

Curbing the curbs:

  • China has dumped testing for most public venues except hospitals and schools.
  • Individuals with mild or no symptoms will be allowed to quarantine at home.
  • Lockdowns should be targeted, ending blanket restrictions, the National Health Commission stated.
  • Schools should remain open if an outbreak is contained.
  • Travel restrictions will be eased inside China.

China has done nothing to prepare for this step.

Rodney Jones, the principal at Wigram Capital Advisors

What was said: “[This] will benefit the resumption of normal life and economic activity, minimizing the impact on society and the economy,” Liang Wannian, the head of the National Health Commission’s Covid-19 task force, told a media briefing as reported by state-run Global Times.

Delve deeper: Yet this is still a massive gamble as China accelerates a stalling vaccination program among the elderly. Domestic vaccines have also shown a lower efficacy rate compared to mRNA Covid shots produced by Pfizer-BioNTech and Moderna.

Between the lines: “The propaganda messaging is that a reopening will be costless. The risk is that they are underestimating just how much work – and cost – the rest of the world has done and borne to get to the point of living with Covid,” Rodney Jones, the principal at Wigram Capital Advisors, told the FT.

Big picture: “China has done nothing to prepare for this step, and [President] Xi [Jinping] appears to be doing so on impulse as a reaction to the protests, rather than as part of a careful policy program,” Jones said.

China Factor comment: The healthcare sector has been starved of funding under Xi’s 10-year watch. The end product has been China’s “zero-Covid” policy to protect the country’s overcrowded hospitals and stop soaring death rates. That could change now in a move to kickstart a tanking economy

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