China's zero-Covid strategy risks further economic disruption: Report

Beijing [China], February 5 : China's continuation with its zero-tolerance policy against the COVID-19 is leading to greater public backlash as high inflation is feeding economic insecurity and public discontent amid economic disruption.
Indeed, the government has grown more authoritarian and state capitalist especially in the run-up to Xi securing a historic third term at this fall's 20th Party Congress.
US-based consultancy firm Eurasia Group said that in both the cases, the coronavirus pandemic and climate change, Beijing will underperform, both at home and on the global stage.
"That's bad news for a year that will be dominated by two crises in desperate need of a coordinated response: the Covid-19 pandemic and climate change. In both cases, the US and China will underperform, both at home and on the global stage," the report said.
Even though authorities are making efforts to fine-tune containment policies, shifting from massive lockdowns to more targeted, small-scale closures in big cities, the country is still unlikely to pivot away from a very low tolerance for virus cases for the rest of 2022.
"Even in the developed world, the economic hangover from the pandemic will endure with disrupted supply chains and persistent inflation. A more deadly variant emerging remains a tail risk, but it would still pose much less danger given the tools available to fight it (much as Omicron would've felt apocalyptic if it had hit the world pre-vaccines, a year earlier)," the US based consultancy firm said.
"China's problems add to the disruption of supply chains, which will present ongoing risks across the world. Shipping constraints, Covid-19 outbreaks, and shortages of staff, raw material, and equipment--all more acute because of China's zero-Covid policy--will make goods less available. High prices for shipping will also hurt small- and medium-sized businesses that don't have the resources to book containers, let alone their own ships," it added.
It also said that "continuing to use aggressive lockdowns to halt transmission will lead to greater public backlash and economic disruption."
Also on the economic side, persistent, high inflation will be an overarching economic and political challenge. Citizens are still enduring lockdowns, shutdowns, sacrifice, and anxiety--while food and gas prices have soared.
The sectors that will face the biggest hit are also the most important for China's economic rebalancing - services, small and medium-sized enterprises and consumption, as opposed to industry, large firms and investment, the report said.