Mass testing of China’s vast population could bring fresh misery to the economy, experts warned on Friday, after Beijing vowed to regain control of the narrative around a zero-Covid policy that has stifled growth and fueled anger across the country.
Leaders have taken a tough approach to contain virus outbreaks, lockdown Shanghai — the country’s economic dynamo and largest city — and slowly restrict movement in Beijing over dozens of new cases.
Authorities have refused to bow to mounting public outcry over food shortages and spartan quarantine conditions in Shanghai, with top officials pledging on Thursday to “stand steadfastly to zero-Covid” and “fight” criticism of the policy.
China’s government has brandished the strategy as proof that it puts human life above material concerns and can avert the public health crises seen in other countries.
But the approach hits the economy and poses a sharp political challenge to President Xi Jinping.
He must now convince an increasingly unsettled public, which has taken to social media to express its anger about lockdowns, that the trade-off between business and life is sustainable.
At Thursday’s meeting — attended by Xi — the country’s top leadership vowed to “resolutely fight against all words and actions that distort, question or oppose our country’s disease control policies.”
Experts fear Beijing’s game plan will weigh heavily on the world’s second largest economy.
Analysts at Nomura predicted on Friday that mass testing mandates alone could cost as much as 2.3 percent of annual gross domestic product.
Shanghai’s 25 million residents have been tested multiple times, while some of Beijing’s 21 million residents have also been subjected to repeated rounds of screening – a policy the government has indicated could be extended across the country to tackle the highly transmissible Omicron variant .
Nomura said a requirement that half of the world’s most populous nation would take a test every three days would cost about 0.9 percent of GDP, while any requirement that 90 percent of the population take a test every two days, 2, would cost 3 percent.
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The restrictions could entail “rather high” costs if extended nationwide, while offering only “limited” benefits as the hard-to-contain Omicron strain could trigger lockdowns in more cities, said Ting Lu, Nomura’s chief economist for China .
The bleak outlook follows Fitch Ratings cut its forecast for China’s full-year economic growth to 4.3 percent from 4.8 percent.
That’s well below the government’s official target of 5.5 percent.
A key index of service-sector activity fell to 36.2 in April, the second-lowest on record, which some experts said was a strong indicator of a country in recession.
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