1. Does Covid Zero mean zero cases?
Yes, ideally. Beijing’s perception of Covid hasn’t changed much since the virus first emerged in the central Chinese city of Wuhan: It’s a public health threat that must be eliminated at all costs, whether it’s spreading via people or animals or lurking on frozen food or mail from abroad. To achieve this, China requires at least two weeks in quarantine for anyone arriving from other countries. Domestically, even the slightest flareup is met with a barrage of targeted testing, contact tracing and quarantines to nip it in the bud, with citywide lockdowns as a last resort. The approach, which has become known as “dynamic clearing,” acknowledges that infections occur but aims to stop the transmission of the virus. The highly infectious delta and omicron variants have made it more difficult for China, which hasn’t gone a day with zero new local cases reported since October. In mid-March the daily tally topped 5,000 for the first time since the peak of the initial outbreak in early 2020.
2. Why is China sticking to it?
In its calculus, the benefits outweigh the costs. The government estimates the strategy has avoided 1 million deaths and 50 million illnesses. Fewer than 5,000 people have died from Covid in the country, mostly during the virus’ initial spread. That compares to more than 900,000 deaths in the U.S., which has a population less than a quarter the size of China’s. Beijing has used those figures to portray its system of governance as superior. Covid Zero also allowed the Chinese economy, the world’s second biggest, to grow while other major economies contracted in 2020. Growth continued last year and 2022 got off to a stronger-than-expected start, although the outlook is clouded not only by Covid but the global repercussions from Russia’s invasion of Ukraine. That’s prompted China to experiment with a closed-loop system to allow some factories to keep operating while sticking to Covid Zero. Workers are effectively put in a bubble, ferried from their company-run dormitories to the plant and back home, with regular testing and temperature checks. China will “strive to achieve the maximum prevention and control effect at the least cost and minimize the impact of the epidemic on economic and social development,” Xi said in March.
3. What’s the domestic downside been?
As the virus has become more contagious, it’s led to more frequent outbreaks, some of which have resulted in hardcore lockdowns, where residents are asked to remain at home and barred from leaving town. A handful have dragged on for weeks and led to shortages of food and medical care, and even cost lives in the western city of Xi’an. Movement restrictions were imposed in March in the tech hub of Shenzhen, home to 17.5 million people, but lifted after a week — relatively short by past standards — under the tweaked policy. Outbreaks in other major cities including Beijing and Shanghai have so far been tackled without citywide lockdowns. Still, consumers facing travel restrictions and fearing infection have avoided vacations, shopping and dining, dampening retail spending. The gloom has added to weak investment and a broader downturn in the property market. Goldman Sachs Group Inc. cut its forecast for China’s growth in 2022 by 0.5 percentage points due to the increased difficulty of containing the omicron variant. In an extreme case where a national lockdown were imposed, economic growth could plunge to 1.5%, the lowest in more than four decades, the bank said.
4. What are the hurdles to getting back to normal?
• While nearly 90% of the population has been vaccinated and a growing number received boosters, the rates are lower for the elderly: 82% for those between 70 and 79 and about 51% for those over 80, health officials said in mid-March. (In Hong Kong, where an even larger proportion’s unvaccinated, elderly people accounted for more than half the thousands of Covid-related deaths in the city this year, as of mid-March.)
• Many analysts point to the lower efficacy of vaccines developed in China. The most widely used are inactivated shots, which offered less protection against infection caused by the original strain of the virus in clinical trials than the novel mRNA vaccines developed by Pfizer Inc., BioNTech SE and Moderna Inc. The inactivated vaccines also appear to produce fewer protective antibodies against the latest variant, omicron, than those induced by shots developed in the West after three doses.
• Chinese health officials have made it clear that vaccination alone isn’t enough, since breakthrough infections are common even with Western vaccines. Researchers at Peking University estimated China would face a “colossal outbreak,” with more than 630,000 infections a day if it were to reopen in a similar manner to the U.S. — and that was before the more-infectious omicron became predominant.
• The run on hospitals across the world, both in under-resourced places like India and in the developed world, is a constant reminder about how China’s patchy hospital network could easily crash under a sudden spike in infections.
• Switching tactics to let the virus infect a large swath of the population could create bad optics ahead of the national congress of the ruling Communist Party slated for later this year, where Xi is expected to try to extend his power.
5. What’s the cost to the rest of the world?
Covid Zero has sent ripples through the global supply chain. Outbreaks have led to temporary production halts at the China-based factories of top carmakers in the northern port city of Tianjin for people to undergo mass testing. Foxconn briefly suspended operations in March at its Shenzhen sites, one of which produces iPhones, then partially resumed under the closed-loop model. The monthlong lockdown of Xi’an caused disruption and delays for leading chipmakers Micron Technology Inc and Samsung Electronics Co. But abandoning the policy could cause far greater disruptions, at least temporarily, if workers were too sick to show up at work, given how much the global economy relies on China for everything from raw materials to finished consumer and industrial products.
6. What’s the endgame for China?
China has given no sign of backing away from its strategy of reacting forcibly to every flareup in the hope that it is quickly contained with few economic and social ramifications. While local lockdowns cause disruptions and spur complaints on social media, the strategy ensures people in the rest of the country can generally carry on with normal life. One of China’s top Covid advisers signaled in an August interview that the country would consider dropping the strategy when the “dividend” is gone. He also urged leaders to closely watch reopening trailblazers like the U.K. and Singapore to learn from their experiences. Some experts think China’s strategy will eventually crumble as the virus becomes too transmissible to control. Another possibility is a new variant may emerge that’s mild enough for the government to relent without harming the population.
7. What’s the outlook for Hong Kong?
The financial hub and gateway to China has prioritized aligning its policy with the mainland in an effort to reopen the border. Successive outbreaks on both sides have kept that from happening. Chief Executive Carrie Lam has vowed to stick with Covid Zero while conceding the city doesn’t have the resources the mainland does to extinguish outbreaks. As omicron swept through Hong Kong early this year, public hospitals became overcrowded and the government’s priorities shifted to vaccinating the elderly and reducing fatalities. In March, after acknowledging that public tolerance was fading, Lam put a plan for citywide testing on hold, announced the lifting of a ban on flights from nine countries including the U.S. and U.K., and cut by half the time incoming travelers need to spend in hotel quarantine — provided they test negative. Social-distancing restrictions will be eased in phases if there is no rebound in infections, Lam said, but she gave no sign of abandoning the Covid Zero policy.
• Bloomberg Opinion’s Adam Minter asks how popular Covid Zero really is among the Chinese people, Shuli Ren looks at “dynamic clearing,” and Therese Raphael and Sam Fazeli examine why China can’t loosen up yet.
• Eric Zhu from Bloomberg Economics looks at what might happen if omicron wins.
• Businessweek digs into the mounting economic damage from Covid Zero, and a Big Take looks at the havoc it wreaks.
• More QuickTakes on what we know about omicron and Covid therapies.
• Bloomberg’s Covid Resilience Ranking charts the best and worst places to be during the pandemic.
• Some of the stranger things that have been in the crosshairs during the push for Covid Zero.
(Adds Xi quote in intro and section 2; Updates elderly vaccination rates in section 4; Hong Kong situation in last section)