China should “strive for maximum prevention and control at the lowest cost and minimize the impact of the epidemic on economic and social development,” President Xi Jinping said Thursday at a closed meeting of the Politburo Standing Committee. – production of the body.
Xi’s statement could serve as a tacit acknowledgment of the impact of China’s coronavirus strategy and its stringent restrictions on the world’s second-largest economy.
China is facing the biggest Covid surge since the first major outbreak in Wuhan in early 2020, and its focus remains largely on containing the pandemic that other countries have chosen to live with.
Authorities have imposed strict measures to control the spread of the virus as cases across the country soared earlier this month. Tens of millions of people have been placed under various forms of isolation. Businesses have been closed and travel has been restricted in several major industrial and technology centers.
But these strict restrictions come at a cost.
Economists are predicting a big hit to China’s economy due to wide-ranging lockdowns. Analysts at Goldman Sachs estimated on Thursday that a four-week lockdown of 30% of China’s territory could reduce GDP by about 1 percentage point. Nomura analysts, meanwhile, believe a zero-Covid strategy will make it harder for Beijing to reach its 5.5% growth target by 2022.
Concerns about the Covid crisis earlier this week helped spark the worst sell-off in Chinese stocks in more than a decade, prompting the government to intervene to reassure investors and halt the fall.
Even before Xi’s announcement on Thursday, there were signs that the Chinese government no longer believes containing the pandemic can come at the expense of economic stability.
On Wednesday, Chinese Vice Premier Liu He, Xi Jinping’s top economic adviser, told a key government meeting that measures to combat the virus should be coordinated with economic development. He also pledged that the government would boost economic growth “substantially” and keep financial markets stable.
On Thursday, Shenzhen, a technology and manufacturing hub in southern China, said it would allow companies to resume operations in an “organized” manner three days after it imposed a strict lockdown prompted by 66 new positive cases.
Foxconn, one of Apple’s key suppliers, said it had partially resumed production in Shenzhen after previously suspending operations in the city due to the Covid outbreak.
The campuses have implemented a “closed loop” that is in line with policies issued by the Shenzhen government, the company said in a statement to CNN Business.