China might not make major changes to its Covid policy any time soon
A couple pass necessities over a Covid lockdown barrier in Guangzhou city on Nov. 17, 2022.
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BEIJING — China won’t likely make major changes to its Covid policy in the near future despite this weekend’s protests, analysts said.
One of the reasons for public unrest was the local implementation of recent central government policy, they said.
“Without a clear guidance from the top, local officials are inclined to play safe by sticking to the existing zero-Covid stance,” said Larry Hu, chief China economist at Macquarie. “It upset many people, who expect[ed] more loosening following the ’20 measures'” announced earlier this month.
Groups of people in China took to the streets over the weekend to vent their frustration, built up over nearly three years of stringent Covid controls. Local infections have surged, prompting more lockdowns in the last week.
Although the protests were rare, it was not immediately clear to what scale the demonstrations were held.
Earlier this month, the central government signaled a step toward reopening by announcing “20 measures” to trim quarantine times and generally make Covid controls more targeted.
However, Hu said it’s unclear whether the purpose of the measures is to drastically reduce new infections — likely requiring a hard lockdown — or lower the pace of increase, with less disruption to the economy and hospitals.
“The week ahead could be crucial, as the news on social unrests over the weekend have increased the sense of urgency for more policy clarification and guidance from the top,” he said.
In Beijing over the weekend, unverified social media videos showed residents pointing to the 20 measures and convincing their community management there was no legal basis for locking down their apartment compound.
An implementation gap
On Saturday, a publication overseen by Chinese Communist Party mouthpiece People’s Daily said that based on the 20 measures, only authorities at a county level or above could call for Covid controls, and that school or traffic closures should not occur arbitrarily.
Separately, the People’s Daily ran a front page op-ed Monday on the need to make Covid controls more targeted and effective, while removing those that should be removed.
It will likely take a month for the 20 measures to fully implemented, after which policymakers can make further changes, said Qin Gang, Beijing-based executive director of research institute ICR.
Especially prior to the measures, “it’s clear we have excessively controlled the virus,” Qin said in Mandarin, according to a CNBC translation. “Because it’s excessive, it has brought many problems.”
He noted how it was no longer sustainable for China’s economy and society to accept continued Covid controls.
China’s GDP barely grew in the second quarter, dragged down by a stringent lockdown in Shanghai. As of the third quarter, growth for the year so far is just 3%, far below the official target of around 5.5% announced in March.
“In the short term, the Covid policy will only be fine-tuned without moving the needle,” said Bruce Pang, chief economist and head of research for Greater China at JLL. “The focus of narratives is expected to be shifting back and forth between eliminating cases and making more precise measures.”
“Authorities are sending signals of a more pragmatic attitude toward economic roadmap, COVID policy and geopolitical relationships, all of which will help to deliver a gradual economic recovery for China,” he said.
China’s swift lockdown in 2020 helped control Covid domestically, prevent many deaths and allow businesses to resume work within a quarter. Authorities have also worried about the ability of the public health system to handle a surge of infections.
However, the rise of more contagious variants and more stringent virus testing requirements, among other restrictions, have weighed on business and consumer sentiment.
Mainland China reported for Sunday more than 40,000 local Covid infections spread across the country, and no new deaths. Most of the infections were asymptomatic. Since Wednesday, the national total — but not the number of cases with symptoms — has soared well above that reported during the height of the Shanghai lockdown.