Health workers around a closed-off neighborhood after new Covid cases discovered in Shanghai
Chinese President Xi Jinping has pledged to reduce the economic impact of his Covid-fighting measures, signaling a shift in a long-standing strategy that has minimized fatalities but weighs heavily on the second-largest economy in the world. world.
While reiterating its commitment to its Covid-Zero policy, China “will strive to achieve the maximum prevention and control effect at the lowest cost and minimize the impact of the epidemic on economic and social development,” Xi said. late Thursday at a meeting of the Politburo Standing Committee, the highest decision-making body of the Communist Party.
It is the first time Xi has emphasized minimizing the economic costs of Covid prevention at a politburo meeting since the start of the pandemic in 2020, according to a Bloomberg search on the government’s website. China is facing the worst Covid-19 outbreak since the first in Wuhan, with tens of millions of people, including residents of Shenzhen’s southern tech center, in lockdown.
As part of a pledge to stabilize financial markets and stimulate the economy, China has said virus controls must be coordinated with economic development. The comments, made at a recent meeting of China’s top financial policy committee, echoed what had been a regular thump from officials over the past month that Covid policies needed to be adjusted to minimize disruption to business.
China is not expected to meaningfully calm down with Covid Zero before 2023, given its need for stability in a politically important year for Xi, people familiar with China’s thinking have told Bloomberg News.
The signals from Xi’s meeting suggest that China will “eliminate infections first and then adjust its virus control strategies,” said Bruce Pang, head of macro and strategy research at China Renaissance Securities Hong Kong Ltd. Phrases in the statement that China should not hesitate in fighting the virus imply that “every adaptation is accompanied by the condition of eliminating infections,” he said.
Growth target
Several economists, including Morgan Stanley and UBS Group AG, have recently revised down their growth forecasts for the year, saying Beijing’s target of about 5.5% expansion will be difficult to meet. Hui Shan, China’s chief economist at Goldman Sachs Group Inc., estimates that a four-week shutdown of 30% of the country could reduce gross domestic product by about 1 percentage point.
The virus checks have led to temporary factory closures at companies such as iPhone maker Foxconn Technology Group and Toyoto Motor Corp. For consumers, the restrictions have led to a slump in travel and spending in shops and restaurants, while sentiment is still weak compared to pre-pandemic levels.
Another positive sign was that the government said on Friday that Shenzhen’s South China technology center will resume factory operations, buses and subways in five districts after meeting their Covid targets.
Beijing also wants minimal disruption to people’s lives, with Xi saying China should “maintain the stability and order of the normal production and the normal life of the people, do a good job in the production and supply of daily necessities and the medical needs of people.”
On vaccines, Xi called for an intensification of public education and promotion of the benefits of the doses and further improvement of vaccination coverage. He also called for the strengthening of scientific and technological research and the development of vaccines.
Nomura Holdings Inc. said China’s focus on developing its homegrown vaccines, which remains uncertain, indicates it’s not ready to abandon its Covid Zero strategy this year.
The comments are seen “neither as a sign of abandoning the current ‘dynamic zero-covid strategy’ nor as a sign of a roadmap for moving to a living-with-covid strategy,” Lu Ting wrote and colleagues from Nomura in China in a note.
