Parts of China are still in and out of COVID-19 lockdowns more than two years after the Pandemic began.
In the last few months, traders and bankers slept in their offices in order to work. When cases increase, factory workers have been told to live and work on-site. 80,000 tourists were stranded on the popular resort island of Hainan after China locked it down for declaring it a COVID-19 hot spot.
Economists and policymakers are worried about China's exit from pandemics. China is the world's second-largest economy and a manufacturing powerhouse so investors and businesses are concerned about the continued restrictions.
"The economic dislocations are now spilling into the larger world, fueling inflation, disrupting supply chains, triggering a retreat or pause by some foreign businesses in China, and increasing external concern over China's deeper isolation," wrote J. Stephen Morrison, Scott Kennedy, and YanzhongHuang for the
China's economy is already being hurt by the long restrictions. According to people familiar with the matter, the country may not hit its growth target this year. In July, the International Monetary Fund lowered its global growth forecast to 3.2% in 2022.
According to the Eurasia Group, there will be more pain as it will likely be "well into" 2023 before China lifts its zero- Covid approach.
There are two reasons why China isn't abandoning its zero- Covid policy.
China's vaccine rate is high, with almost 90 percent of the population fully protected.
China's National Health Commission reported in a July update that only 61% of elderly people over the age of 80 have been vaccined. Reports accounting for vaccine hesitancy among China's elderly are sparse, but reasons include concerns about safety, adverse reactions, and the low incidence rate of COVID-19.
The country's exit from the Pandemic is hampered by the lack of a vaccine. The majority of Chinese are inoculated with vaccine.
A top official for the China National Health Commission said in late July that China's state and party leaders have all been given vaccine against Covid-19 with made-in-China vaccine.
"Vaccination in elderly populations will improve in the coming months but will not be enough to eliminate overall health risks for this population," wrote analysts in a note.
It's of national interest for China to develop its own vaccine and not have to rely on imports. Ensuring the country has the technology in place for the next outbreak is part of it.
Bo Zhuang, a senior analyst with Boston-based investment management firm Loomis Sayles, told Insider that it's not just about national pride but also so that vaccine manufacturers will know what to do in the next Pandemic.
He told Insider that the Chinese government doesn't want to subsidize companies in developing this technology in the future.
After Chinese New Year, which will be in late January, he thinks China will end its lock downs.
China needs imported treatments and a change in public messaging to get out of covid-Zero.
The analysts from the Eurasia Group wrote that Beijing is more willing to import treatments than vaccines.
Beijing is counting on Pfizer's Paxlovid pill to treat COVID-19 since it would be hard to reverse state messaging that casts doubt on the efficacy of foreign vaccines.
News media have characterized foreign vaccines as inferior products and Beijing characterized the development of home grown vaccines as a demonstration of its sophistication in the pharmaceutical space. The analysts wrote that the drugs were not hamstrung by the government or population.
Analysts said that a pivot out of Zero Covid would need a successful deployment of treatments. According to data modeling by scientists in the US and China, 1.5 million people may die in China if the Zero Covid policy is abandoned.
Even with Covid treatments, China will need to embark on a public-messaging campaign to convince the Chinese people that health risks from both vaccine and therapy have become less.
The next meetings of the national legislature and the top political advisory body, known as the "Two Sessions", take place in March 2023, so the messaging will likely only intensify after this meeting, they said.
It is suggested that a long trek out of zero- Covid.
According to an official transcript, the president said in June that "even if there are some temporary impacts on the economy, we will not put people's lives and health in harm's way."
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