China's zero-COVID policy puts economy under strain
Apr 12, 2022
Beijing [China], April 12 : The complete lockdown in major cities amid China's zero-COVID policy has put the country's economy under strain with increasing inflation and disrupted global supply chains, according to a media report.
Though China refuses to acknowledge it, the rigid stamping out of COVID-19 from the country is beginning to affect big companies and industries which are suspending operations in Shanghai and other cities, reported The Hong Kong Post.
Millions of people in China's main financial centre, Shanghai, are locked in their homes, facing food shortages as the city has been under lockdown for close to a fortnight. This has led to unrest as the hungry residents are protesting against the government.
In Shanghai, "a record 21,000 new cases and a third consecutive day of COVID testing as a lockdown of its 26 million people showed no sign of easing and other Chinese cities tightened curbs - even in places with no recent infections," reported The Hong Kong Post citing media reports.
Further, passenger flights to Shanghai, which is one of the world's busiest airports, have been cancelled and air cargo rates between Shanghai and northern Europe are shooting up every day, with a significant rise of 43 per cent from the level before the outbreak.
It is estimated that "23 Chinese cities have implemented either full or partial lockdowns" and notably, these cities contribute 22 per cent of China's GDP. Big factories belonging to Chinese and Taiwanese manufacturers are shut amid lockdown and the ports are clogged with slow loading and unloading of freight affecting global trade.
Moreover, the World Bank has also warned China of the growing negative impact of the lockdown policy and last week slashed the country's 2022 growth forecast, estimating a growth of 5 per cent this year, sharply down from last year's 8.1 per cent. Goldman Sachs has forecast China's growth in 2022 at 4.5 per cent. According to Citi, "the Omicron wave could drag down China's GDP growth by 1 percentage point in the first quarter".
However, the Chinese government has refused to review its policy as President Xi Jinping, the architect of the Zero COVID programme, claims he can minimize the losses but the worsening situation in Shanghai suggests things getting out of his control.
With this rigid policy in place, the people in the know in Beijing have predicted that there may not be any respite from the lockdown till COVID cases continue to be reported. "China's rising cases and lockdowns in Shanghai and several other cities will suppress activity across a wide range of sectors, including in-person services, travel, logistics, construction and some manufacturing," the media outlet quoted them as saying.
