China’s ‘Zero Covid’ policy has backfired spectacularly, crippling the economy.
CHINA’S Zero Covid policy has wreaked havoc on the economy, as strict anti-coronavirus measures slowed the world’s second-largest economy.
As the country prepares for major international events, analysts predict that border restrictions will be in place for the entire year of 2022.
This week, a team from Goldman Sachs Group Inc predicted that quarantine measures for international arrivals would likely be maintained to prevent coronavirus outbreaks during the upcoming Winter Olympics, as well as significant political milestones like the 20th Communist Party Congress.
“We doubt policymakers will eliminate quarantines before the end of the year,” the analysts added, referring to the upcoming congress.
“Because transmission is typically higher in the winter months,” they wrote, “it’s possible that border restrictions will remain in place until spring 2023.”
In contrast to much of the rest of the world, China is enforcing its Covid Zero strategy right now, while the rest of the world is adjusting to living with the virus.
The country’s approach to combating the spread of the virus has included mass testing and strict lockdowns of entire areas.
However, according to the Bank of Singapore’s chief economist, “an early end to China’s zero-Covid policy would help boost activity even more now, allowing the economy to have a good chance of growing at its annual trend rate of 5.5 percent in 2022.”
“However, Beijing is unlikely to abandon its strategy after the National People’s Congress in March,” wrote Mansoor Mohi-uddin in the Financial Times.
“Instead, until the 20th National Party Congress in November, China is expected to maintain its stance.”
“Investors should expect strict lockdowns and closed borders in China to continue throughout the year,” he continued.
“Global markets are likely to suffer significant consequences.”
“The country’s GDP growth may fall below its trend rate in 2022, limiting commodity demand,” he predicted.
“The absence of Chinese tourists will continue to have an impact on tourism-dependent economies throughout Asia-Pacific.”
The teetering real estate giant, China Evergrande Group, is adding to the economic uncertainty, as worried investors rush to reclaim some of their money from the debt-ridden company.
On Tuesday, a group of people who had invested in Evergrande’s wealth management products gathered at the company’s Guangzhou headquarters.
“Evergrande, return our money!” chanted around 100 people as they surrounded the company’s offices.
This was a reiteration of the demands.
“Brinkwire News in Condensed Form.”