Since strict restrictions were relaxed earlier this month, the number of Covid-19 cases in China has increased, raising worries about the potential impact on the world economy given the country’s financial clout.
China started to dismantle its zero-COVID policy of lockdowns and testing after protests against the restrictions that kept the virus at bay among its 1.4 billion-strong population — at a high cost to the second-largest economy in the world.
Kristalina Georgieva, the head of the International Monetary Fund, stated on Tuesday that the relaxation of restrictions would “create some difficulties over the next months.”
This is because more people will experience temporary job inability due to the inescapable rise in infections.
Hospitals in China are finding it difficult to keep up with the rising number of cases, and the government has admitted that it is no longer possible to accurately track cases.
The World Health Organization (WHO) estimates that there were more like 150,000 new COVID cases during the previous week compared to the 16,000 new cases that the National Health Commission (NHC) of China reported.
In contrast to China’s seven official death reports, the WHO claims it received reports of 443 deaths during the week ending Tuesday.
The NHC stated last week that because many asymptomatic people are no longer submitting to nucleic acid testing, it is impossible to determine the precise number of asymptomatic infected people.
The World Bank has reduced its growth projections for China, and retail sales have fallen.
According to official data released on Thursday, retail sales declined in November even though China experienced some of the highest infection rates ever recorded at the time.
“In November, local outbreaks spread to the majority of provinces across the country, residents’ travel decreased, and consumption scenarios were restricted,” said Fu Jiaqi, a statistician with China’s National Bureau of Statistics.
“Non-essential goods sales and gathering-based consumption were significantly impacted.”
Capital Economics economists Julian Evans-Pritchard and Zichun Huang stated that while the transition away from zero-COVID laid the foundation for a future recovery in activity, the “transition period will prove quite disruptive.”
The “ups and downs of the pandemic” as well as other factors like a shaky real estate market were cited by the World Bank on Tuesday in lowering its China growth forecast for this year and the following year.
Divergent opinions exist regarding whether the increase in Covid cases in China will have a negative effect on the world economy.
The US has expressed concern that the surge will sabotage international trade and supply chains.
According to Ned Price, a spokesman for the US Department of State, the “toll of the virus is of concern to the rest of the world” given the size of China’s economy.
Wally Adeyemo, the deputy secretary of the US Treasury, stated to Reuters on Tuesday that the recent COVID developments in China as well as the energy shortages in Europe were “already affecting” the US economy.
The ANU College of Business and Economics’ Professor Meijun Qian noted that there has, however, long been a history of trade tensions between the US and China.
Four years after making a commitment to do so, the US President has yet to persuade his “very good friend” to agree to the major new agreement he has long coveted.
According to her, the zero-COVID policy will have no more of an effect on the world economy than an increase in cases.
Professor Qian asserts that any potential effects on the world economy would only last for a short period of time and that removing restrictions would be beneficial for trade and supply chains in the long run.
“It’s always going to be better than zero-COVID where they restricted the movement of people and some people can’t go to work at all,” she said.
“Right now they are at least letting people go to work and school.”
(Adapted from Scroll.in)