China has sought a severe “zero-Covid” policy which has involved some of the most restrictive health measures witnessed anywhere in the world, including food rationing and indefinite lockdowns.
Disruptions have already cost China 18 trillion yuan (US$2.68 trillion), according to Xu Jianguo, associate professor of economics at the National School of Development in Peking University.
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The Wuhan outbreak in 2020 affected 13 million people and caused 1.7 trillion yuan worth of economic damage, he said on a webinar.
China has set 5.5 percent as a target for economic growth this year, but Jianguo challenges the country will even be able to match its 2020 growth of 2.3 percent.
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The Chinese Communist Party has been censoring online criticism of the policy.
China, a predominantly export market, has been unable to sell many of its goods abroad due to COVID-19 restrictions stopping ships from moving in and out of ports such as the one in Shanghai, a city that has recently seen its 26 million residents prevented from leaving their homes.
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The real estate sector has also stopped growing thanks to a recent downgrade of one of China’s largest property developers, Evergrande, which missed an interest payment due to foreign investors but repaid its domestic investors in China.
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The government is also worried about inflation, meaning it is unlikely to give out cash or cheap loans to small and medium-sized businesses on the scale of 2020, providing less of a financial cushion for companies struggling under lockdown restrictions.
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Economists have dropped their forecasts for China’s 2022 gross domestic product growth as the lockdowns show no sign of being canceled.
“To put it simply, it is already difficult to reach 2.3 percent this year, and even harder to go beyond this rate,” said Xu, according to the South China Morning Post, adding: “The main reason for the cooling economy right now does not lie in social financing or monetary issues, but in COVID prevention and control.”
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More than 160 million people in China have been in lockdown so far in 2022, with China seeing more than 80,000 infections on track to surpass its 2020 case count of 92,514 — according to the professor.
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“Providing income support for small businesses and service firms, which provide many jobs, and letting them resume work as soon as possible is the key to protect people’s livelihood,” said Xu Shaoyuan, a research fellow at the Development Research Centre of the State Council.
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