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China drops “zero Covid” faster than expected – despite a largely unprepared healthcare system

As of December 7th, China has factually discontinued its “Zero Covid” policy, broadly dropping lockdowns, reducing PCR testing requirements to a minimum, introducing home quarantine for patients testing positive and largely reducing Health Code checks. A few days later, on December 12th, the government completely dropped the Travel Code.

Given the fact that the healthcare system remains largely unprepared, experts expect massive waves of infections in the coming 1-2 months, with up to 60% of the population – over 800 million people – expected to test positive according to Feng Zijian, former deputy director of Chinese Center for Disease Control and Prevention. The government’s focus therefore quickly shifted towards accelerating its vaccination campaign and public health education, and towards ensuring the supply of OTC drugs such as those for fever and cough.

This sudden policy relaxation is a result of Beijing’s recalibrated prioritization based on three key factors:

  • Healthcare: More than 90% of the entire Chinese population and 86% for the elderly above 60 have been fully (2x) vaccinated, mostly with the Chinese own inactivated vaccines Sinopharm and CoronaVac. Still, elderly above 80 remain less protected, with 66% having received two doses and only 40% boosted. However, China successfully ramped up its intensive care capacity, reaching 10 beds per 100k population – 3 times higher than its 2020 level and higher than in many OECD countries (Switzerland 9.8, Spain 9.9, Netherlands 6.7, according to Our World in Data). Whether this will be enough remains unclear. As a conflicting data point, a study by Chinese scientists in May 2022 concluded that a rapid relaxation of Covid measures could require ICU capacity to increase by a factor of 15.6.

  • Economy: Urban youth unemployment (16-24 years old) has come down slightly in September and October (17.9%) after its peak of 19.9% in July. Compared to the 12-13% level in 2018-2020, it remains high, however. In addition, local governments’ financial resources are increasingly depleted, as they had been paying for the costly mass testing of their residents until November this year – a heavy financial burden especially for less developed cities and towns, many of which are in financial distress also due to lower fiscal revenues as a result of tax and fee cuts to stimulate the economy, plus, finally, less income from land sales.

  • Social and political factors: After Xi Jinping secured his third term as CCP General Secretary at the 20th Party Congress, the “Zero Covid” policy that was tied to him personally has gradually been de-politicized – allowing for a policy adjustment, with the “20 measures” issued on November 11 being the first such sign. Plus, the “Urumqi-incident” and subsequent gatherings at several universities and cities in the country revealed the discontent with “Zero Covid” among the Chinese population, mostly visibly among university students. The Chinese government recognized the change in public opinion, and Xi during a meeting with European Council President Charles Michel recognized “frustration” of the protesters. To maintain social stability, therefore, Beijing seems to have decided to accelerate the relaxation.

These days, especially people in tier-1 cities are starting to be hit by the first wave of rapidly increasing infection numbers. The National Health Commission (NHC) reported 2,240 newly tested cases on December 11th. The real new cases must be much higher, as the large-scale PCR testing has been dropped.

This is a high-pressure test for the Chinese healthcare system. Small policy adaptations may still happen along the way, but the opening-up trajectory will not be reversed. With increasing numbers that recovered from the virus being immunized against the less lethal BF.7 variant, a gradual opening-up including resuming normal international travel looks increasingly possible for Spring/Summer 2023.


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