The Beginning of the End for Zero COVID?

A ChinaFile Conversation

China’s National Health Commission today announced an “optimization” of the country’s COVID-prevention policy, which includes the easing of quarantine requirements for foreign travelers and modifications expected to limit the scope of lockdowns. At the end of October, videos began circulating on social media of workers at an iPhone plant in the city of Zhengzhou fleeing factory grounds to escape a quarantine lockdown of some 200,000 employees. Whether the workers wanted to escape the lockdown itself or avoid COVID infection, the incident highlighted the ongoing challenges China faces in its management of the epidemic, and underlined questions surrounding the longevity of China’s zero-COVID policy.

In recent days, Guangzhou has seen what officials have described as a “dire and complicated” outbreak, while rising COVID across the country has led to further lockdowns like the one in Zhengzhou. Meanwhile, on Nov 10 China recorded more than 10,000 new cases.

What are necessary preconditions for a true softening of the zero-COVID policy? How will it end? And what are likely to be its consequences? —The Editors

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When we consider the current and future economic impacts of China’s COVID policy, it’s important to look at how different levels of restrictions impact different segments of the economy.

At their most basic, the restrictions limit mobility. The farther one needs to go, the harder it is. Traveling internationally is prohibitively difficult. Domestic tourism hasn’t fared much better. During September’s Mid-Autumn Festival, tourism revenue stood at RMB 28.68 billion, down 22.8% year over year—and 60.6% of 2019 levels. The same metric was RMB 287.2 billion during the weeklong October National Week holiday, down 26.2% from last year—and 44.2% of 2019 levels.

When outbreaks do occur, non-essential gathering is the first casualty. Bars and nightclubs shut. Restaurants go takeout-only. After years of linear growth, the catering industry began to contract in 2020. In the first nine months of 2022, industry revenue was down 4.6% year over year.

The complications around traveling, congregating, and planning have dramatically affected domestic demand. In Q3, consumption accounted for 52.4% of real GDP growth, down from 77.5% in Q3 of 2021.

When outbreaks get really bad, these effects intensify with implications beyond the leisure sectors. Going to work becomes impossible. Logistics networks get snarled. The recent lockdown at Foxconn’s mega iPhone assembly plant in Zhengzhou sidelined thousands of workers—and may have been the prime contributor to Foxconn’s (and Apple’s) decision to move substantial production to India. Due in large part to the Shanghai lockdown, Q2 GDP growth was 0.4 percent—the second worst in the Reform Era.

There is also the major political and budgetary strain that this places on local governments – which are already dealing with all kinds of fiscal issues. Recently, many local governments have even ceased offering free COVID testing.

All of this begs the question: if the economic impact of zero-COVID is so severe, why does the policy persist?

The simple answer: in the eyes of leadership, the alternative is worse. Given low natural immunity rates, lingering uncertainty around the quality of domestic vaccines, and efficacy of government messaging in communicating COVID’s dangers, a rapid reopening could lead to a health system overrun. The social chaos that could entail might appear too much for the Party to handle. Locking down large cities remains far more manageable than the worst-case opening scenario. And, as top leaders reiterated at the November 10 Politburo meeting, they plan to “unswervingly adhere to the principles of 'people first, life first.'" Translation: economic considerations are secondary.

There is simply no getting around the fact that zero-COVID will persist, with slight tweaks, for some time—almost certainly well into 2023. Opening will be gradual and clearly telegraphed. Even with rhetorical and regulatory easing, it will take time for changes to actually take hold vis-à-vis local government implementation and social norms around the virus. Major breakthroughs in vaccine efficacy and/or antivirals would likely accelerate the process, but not by much.

Leisure industries and domestic consumption will continue to struggle. The cycle of outbreaks and lockdowns will persist, bringing with them the attendant economic effects. Local governments will face major fiscal burdens. The hope is that outbreaks will be better managed, lockdowns more targeted and precise. But, that has been the hope for the past year.

China can’t remain closed forever, but it can remain closed for a lot longer than many observers seem to think.

If zero-COVID ends, we should not expect the health codes that have become omnipresent in many parts of China to die along with forced quarantines. Per the State Council’s November 11 announcement on “optimized” COVID measures, “tenaciously pursuing” the dynamic zero COVID policy will continue, even as quarantine requirements are relaxed. The large-scale app-driven citizen monitoring in the name of zero-COVID helps normalize targeted surveillance of populations the government deems “threats”—and vice versa. For example, the broader population is now subject to movement limitation methods developed in Xinjiang, such as “closed management” (封闭式管理, fengbi shi guanli), which grants residents of apartment compounds just one way in and one way out. These methods of physical intrusion leave little leeway for citizens to worry about virtual intrusion. In the post-COVID era, the terror of the status quo evokes a hierarchy wherein digital privacy ranks relatively low.

When protests against state banks broke out this summer in Henan after hundreds of thousands of people saw their life savings threatened by failing banks, authorities flipped affected customers’ health codes red, effectively barring them from going anywhere. (If you can’t go outside, you can’t protest.) Using health codes to hinder uninfected individual’s freedom of moment runs counter to the Cyberspace Administration of China’s data protection regulations, released in response to COVID in February 2020. “Personal information collected for epidemic control and disease prevention and treatment may not be used for other purposes,” the notice states. For its part, the Zhengzhou Commission for Discipline Inspection announced that at least five offending officials were punished, but only after the protests had been broken up.

Officials in Henan are a shining example of covid app “mission creep.” The original mission—constant locational monitoring in the name of transmission prevention—was already invasive. But central authorities understand the political stakes of maintaining low-zero COVID, as well as preventing the emergence of another epidemic within China’s borders. Even more concerning, if digital surveillance helps prevent future lockdowns, past protests during confinement suggest the public might, understandably, prefer to be tracked than trapped at home.

The spring 2022 Shanghai lockdown and the severe quarantines in Xinjiang in September have inspired bursts of unrest, underlining residents’ antipathy toward lockdowns and their immediate and physically threatening side effects, like losing access to food or medicine. Foxconn workers fleeing impending lockdowns were motivated by the company’s excessive focus on productivity and the government’s zero-COVID policy, not the digital surveillance that underlies it. In Maslow’s hierarchy of needs, freedom of movement and access to food rank significantly higher for most than avoiding digital detection—for now.

Even if zero-COVID policies are functionally relaxed, “epidemic prevention” has proven far too useful a rationale for all kinds of monitoring. Between surveillance cameras in public and phones in pockets, the Chinese Communist Party, in coordination with state agencies, tech companies, businesses, and, to a degree, individuals, appears to be achieving a two-sided entrée into people’s personal lives—watching them from telescopes and microscopes simultaneously. Convincing them to give that up would be a herculean task.

Xi Jinping has staked significant political capital on his handling of the COVID-19 pandemic. Ever since he told the head of the WHO, in late January 2020, “I myself give the orders. I myself make the plans,” he has owned the response to the pandemic. On multiple occasions when it has seemed that the zero-COVID policy has inevitably run its course, he has doubled down and the country has tightened restrictions ever further. I’m not in a position to speculate on exactly how the policy will end or what living with the virus will look like in practice, but I do think that the most interesting long-term consequence of the policy is that it has subtly rewritten the social contract in China.

Zero-COVID represents a new form of legitimacy for the Communist Party. In previous eras, the assumption has been that the Chinese people accept authoritarian controls and the continuation of single-party rule—and, in exchange, the Party creates the conditions for economic growth and people’s lives become materially better. This was true for the 40 years of reform and opening, as China’s economy rocketed ever upwards. But zero-COVID has shown the Party reaching for a different form of legitimacy, one level deeper on Maslow’s hierarchy of needs. Continued lockdowns and the strangling of productive industry have shown that the Party is now willing to sacrifice economic growth for something even more sacred: life itself.

Under slogans like “life above all else” and “people first life first,” the Party now argues that it is unique amongst great powers in the fact that it has prioritized life during the pandemic. While American politicians openly argued that the economy was more important than elderly people’s lives and racked up a death toll of over one million, China proudly highlights its zero-COVID policy as a wild success in comparison. As MOFA spokeswoman Hua Chunying said in September 2020, “I have no intention of judging the U.S. response to the epidemic, but I remember that Dr. Fauci once said that numbers do not lie.”

How convincing this will be for the population over the long term is unclear. While there is a compelling argument in the aggregate for the stark comparison in death rate, the reality of grinding lockdowns has worn people down. The youth unemployment rate means that roughly one in five urban young people are out of work, which has increased the already brutal competition in society. Rates of depression have skyrocketed, as have online searches for psychological counseling. The long-term psychological fallout is an issue that will reshape Chinese society for years to come. This is not just in terms of the burden of mental health issues that the pandemic has brought into sharp focus, but also in how people relate to this new social contract.

The substantive precondition for the end of China’s zero-COVID policy is an increase in the vaccination rate for vulnerable populations, especially the elderly, sufficient to mitigate the risk of large numbers of excess COVID-related deaths. As of this past summer, approximately 70% of China’s elderly population had been vaccinated and given booster shots, but this was a considerably lower rate than in countries like Germany or Japan, where upwards of 85% of the elderly population had received a booster.

Moreover, all existing vaccinations have used inactivated virus technology instead of the more effective mRNA approach widely used in the United States and Europe. China has not yet approved foreign mRNA vaccines, and homegrown versions only recently began clinical trials, suggesting that widespread deployment remains many months to years away.

There may also be a political precondition to formally ending zero-COVID policies, given the personal commitment Xi and other top leaders have attached to them, most notably at the recent 20th Party Congress. This political consideration to ending zero-COVID measures is difficult to evaluate, but is likely to involve a subjective assessment by Xi of political and social stability risks as much as public health ones.

In the meantime, Beijing will likely continue to refine its dynamic response approach, building on the recent relaxation of quarantine requirements for overseas travelers. Over time, this will probably mean loosening public health measures to mitigate their economic and social impact. In practical terms, this relaxation will likely involve further shortening quarantine periods and de-emphasizing the use of strict lockdowns. Some restrictive COVID measures are likely to persist in China until mRNA vaccines can be widely deployed. 

The lasting consequences of COVID for China are likely to be both economic and social. On the economic front, COVID has produced slower growth and prodded foreign firms to re-think China-centric supply chains. On the social front, lasting consequences will likely include lingering mistrust between the state and its citizens, especially urban residents; and a bigger footprint for digital tracking and surveillance technology.

China’s highly restrictive COVID measures were effective in saving lives in response to early variants but have done more harm than good in more recent waves.