China’s ‘Dynamic Zero’ Pandemic Measures Have Hidden Costs

China’s ‘Dynamic Zero’ Pandemic Measures Have Hidden Costs
A worker in PPE disinfects the neighborhood in Shanghai, China Friday, April 08, 2022 (FeatureChina via AP Images).

This time last year, China appeared to be bouncing back from the effects of the coronavirus pandemic and leading the world’s economic recovery after a pandemic-induced slowdown. But after a recent spike in infections that confined an estimated 50 million people to lockdown, the “Zero COVID” policy that initially kept the worst of the coronavirus at bay is now the biggest threat to China’s economic growth.

China’s economy exceeded market expectations in the first quarter of 2022, growing 4.8 percent, according to data released Monday by the country’s National Bureau of Statistics. The figure is a decline from the previous year’s 8.1 percent growth, but slightly higher than the 4 percent growth seen in the fourth quarter of 2021. Though Chinese officials have pointed to the improved quarterly performance as evidence of the economy’s resilience, other indicators looked less promising. Retail sales tumbled 2 percent in March and shrank by 3.5 percent compared to the same period last year. The national unemployment rate also increased in March, exceeding Beijing’s targeted ceiling of 5.5 percent to reach a nearly two-year high of 5.8 percent in March.

Many analysts have warned that “more pain will come” as the current indicators may not fully capture the impact of the lockdowns, which broadened in March amid China’s largest coronavirus outbreak since the pandemic’s onset. “The pandemic has to be the biggest source of risk for China’s growth this year,” Zhennan Li, chief China economist at AllianceBernstein, told the Wall Street Journal.

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