Page 46 - Nigeria one mag en-21

China's zero covid policy: Is the cure worse than the disease?

City of Shanghai, China

The footage of Shanghai, now a ghost town, has reached everyone. Since the end of March, China's
economic and financial capital has been confined. The anger of the 25 million souls who live in the city
has found expression on social networks. Some residents have not hesitated to share their daily lives
related, including difficulties in supplying fresh produce and limited access to medical care outside
Covid. Moreover, the sending of COVID-positive people to a quarantine center caused a certain amount
of concern. In two months, Shanghai has become the symbol of China's extreme policy to eradicate
Covid.
As the city slows down, investors and business leaders seem to lose patience. Indeed, IPOs are now
impossible due to administrative closures. Traders are forced to telecommute and are less productive
than usual, having to favor large transactions over smaller ones. As a result, liquidity levels are
particularly low and borrowing costs are excessively high. After eight weeks of lockdown, the vice mayor
of Shanghai has announced a phased reopening of businesses starting Monday, May 16.
It is not certain that these relief measures will bring reassurance to observers. Because in a pretty
mechanical process, each reopening is necessarily followed by a new outbreak of infections. By
stubbornly applying a zero Covid policy, China risks locking itself into a vicious circle of containment -
reopening - outbreak - re-containment. Moreover, it is not proven that the current restriction measures
will lead to the total eradication of the virus.
However, it is now the risk of containment that hangs over Beijing, raising the concern of economists.
Indeed, for the last two weeks, the city has been multiplying preventive measures to avoid what would be
perceived as a tragic political and economic setback. Beijingers are now working from home. This
situation has a worrying impact on the country's economic activity. From this perspective, it is difficult
to know when business and industry will really recover.

International 46