Analysts say China could double its approach to zero Covid as a new omicron variant raises concerns about a new wave of Covid in the global pandemic and wreaks havoc on global markets last week.
“The proliferation of high-transmission options could ultimately make this strategy untenable. But in the short term, the authorities are likely to redouble their efforts, ”said Mark Williams, chief economist for Asia at Capital Economics, in a Friday note, adding that it would have“ implications ”for China’s zero-Covid strategy.
“Intermittent local blockages will continue to negatively impact activity, and fears of being flagged as close contact will keep many people at home,” he said.
A recently identified variant of the omicron, also known as B.1.1.529, has been reported for the first time in South Africa. On Friday, the World Health Organization identified it as an option of concern due to the high number of mutations. “Preliminary evidence suggests an increased risk of reinfection with this variant compared to others [variants of concern]”” – said in a message from the UN health agency.
To be sure, the WHO said it remains unclear whether the omicron variant of Covid causes more severe disease than other strains such as delta.
China has adhered to its zero-infection strategy with the Covid virus, despite the fact that many countries have moved to live with the virus and some restrictions have been lifted. An archived photograph of workers setting up beds at an exhibition center converted into a hospital in Wuhan in central China’s Hubei province on February 4, 2020.
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Helen Zhu, managing director of Hong Kong-based investment firm Nan Fung Trinity, echoed similar sentiments over China’s response.
“If omicron turns out to be a serious threat, I think China will certainly continue to extend its isolation period,” she said Monday on CNBC’s Asia Street Signs.
China has adhered to its zero-infection strategy with the Covid virus, despite the fact that many countries have moved to live with the virus and some restrictions have been lifted. Countries initially took an aggressive approach through massive blockages and severe social restrictions, but they gradually abandoned this strategy as the highly contagious delta variant spread quickly and blockages became less effective.
Morgan Stanley said the new omicron strain could lead to further delays in reopening – not only in China, but also in Hong Kong and Taiwan, in a report from Morgan Stanley on Monday.
“These countries have largely retained the Covid-zero strategy. With this new option, the short-term economic impact is likely to be limited – but it means any resumption attempts are likely to be pushed into the background, delaying a stronger rebound in consumption growth, ”the bank’s economists wrote.
Impact on trade and delivery
China’s ultra-strict coronavirus-free strategy suggests massive blockages – even if only one or a few cases are identified. It also includes extensive testing, tightly controlled or closed borders, and robust contact tracing systems and quarantine mandates.
The Asian giant has also introduced stringent checks at its ports, including monitoring ships and cargo to keep out infections.
According to Williams, in the new version, any possible tightening of measures will hit the capacity of exporters.
“For exporters, tight control over the crew of air and sea transport, as well as possible closings of ports, will impose additional restrictions on their ability to fulfill orders,” Williams said.
Meanwhile, a study by mathematicians from Peking University found that China could face more than 630,000 Covid-19 infections a day if it abandons its zero-tolerance policy by lifting travel restrictions.
In a report published in China CDC Weekly by the China Center for Disease Control and Prevention, mathematicians said China cannot afford to lift travel restrictions without more effective vaccinations or special treatments.