Explained: Why Covid-19 is surging in China and its possible global economic impact

China is currently witnessing a major surge in Covid-19 infections, being described as the largest of the pandemic anywhere across the world. The explosion in infections comes after the country announced a sudden near-abandonment of the key parts of its “Zero Covid” containment strategy on December 7 following protests.

This new crisis triggered by a rapid surge in Covid-19 infections is expected to have a major negative impact on China’s economy as well as that of the world, amid concerns of a global recession.

What is happening?

“Zero Covid” refers to the set of restrictions – some of the strictest in the world – geared to contain the spread of Covid-19 infections. Among other measures, local authorities imposed lockdowns across neighbourhoods or cities even if only a few cases were found. Such lockdowns remained in place until no new infections were reported in that area.

These strict controls were eased about a week after rare nationwide protests against such restrictions. Among other relaxations, lockdowns are now limited to buildings, floors or units instead of entire neighbourhoods or cities.

There are already signs of the health care system getting overwhelmed. A video shared by South China Morning Post, shows patients being hooked up to intravenous drips in their cars due to non-availability of beds in clinics and hospitals.

Offices, streets and shopping centres have been left deserted in cities such as Beijing, CNN reported. Local authorities have been asked to shore up their preparedness by December-end “in preparation for the waves of infection,” state-operated newspaper Global Times reported. According to the BBC, people have started panic-buying medicines and Covid-19 testing kits amid reports of shortages.

How bad is the situation?

There are concerns that a new variant of the SARS-Cov-2 virus may now be circulating in China. Data from China’s health commission shows that daily symptomatic cases on the Chinese mainland rose from about 2,000 in mid-November to 4,000 by November-end. The number touched 5,000 by the first week of December. Along with the asymptomatic cases, which China counts separately, the daily case number had crossed the 40,000-mark on November 27.

But as infections surged, the country stopped publishing asymptomatic cases starting December 14.

The country’s death toll stood at 5,242 on December 19. However, various estimates suggest there could be an undercounting of the number of confirmed cases as well as the death toll.

While data-wise suggests that daily symptomatic cases have subsided now, inching back to 2,000-2,200 per day since December 11, the country has started reporting single-digit deaths. Since November 24, it has attributed ten deaths to Covid-19.

Yet, China’s chief epidemiologist Wu Zunyou said on December 18 that he believes the country is experiencing the first of three expected infection waves this winter. Public health officials there estimate 60% of the country’s population – roughly 10% of the global population – could be infected over the next three months. Death toll forecasts range from the hundreds of thousands to tens of millions.

“This pandemic is just going to blow through [China] in the next weeks,” Reuters quoted Michael Osterholm, director of the Center for Infectious Disease Research and Policy at the University of Minnesota, as saying.

Why is this happening?

The Communist Party of China has built a narrative domestically that its “Zero Covid” is a superior strategy of tackling the pandemic as compared to that of its western counterparts, claiming the restrictions helped protect its ageing population so far. Zero Covid’s result, Beijing claims, was that there were only 5,242 Covid-related deaths until December 19, compared to 1.1 million in the United States – the highest in any country. Only those deaths caused directly by the virus are counted by China as Covid-19 fatalities. Death of comorbid patients following the infection may not be counted as Covid-related. Given global doubts about the quality of Chinese government data, it is difficult to verify the real situation on the ground, as well as the number of Covid-19 cases and associated deaths.

The sudden easing of restrictions has exposed the Chinese population, which lacks herd immunity, to the virus. Waning benefits of China’s homegrown Covid-19 vaccines, which have proved to be less effective in protecting people against serious illness or death than those used in many other nations, as well as vaccine hesitancy has contributed to this situation. Beijing has followed the path of vaccine nationalism and has so far refused to use Covid-19 vaccines made in the West.

While China claims that more than 90% of its 1.4 billion population has been fully vaccinated, all using homegrown vaccines, only four in 10 people aged 80 and over – an age group more susceptible to severe symptoms – have received three vaccine doses. This means “lots of hospitalisation and more deaths,” Dr Ali Mokdad, an epidemiologist at the University of Washington Population Health Initiative, told ABC News. The country’s domestic vaccines have also been questioned over their effectiveness against the Omicron variant, which is largely driving the global circulation of the infection.

What will be the economic impact?

The lockdowns imposed under Zero Covid over the past two years had already weakened China’s economy, hurt businesses as in the case of the financial hub of Shanghai in April and disrupted global supply chains. The domestic service sector was particularly battered by the stringent restrictions. As a result, one in every five Chinese in the 16 to 24 age group was unemployed earlier this year. This figure is expected to worsen next year when 11.6 million graduates will enter the workforce, Bloomberg reported.

Now, the rapid surge in Covid-19 infections could lead the world’s second-largest economy into another crisis, further constrain global supply chains and delay economic recovery in China and across the world.

Business confidence in China has already fallen to its lowest since 2013, according to a survey by World Economics. The country’s gross domestic product is expected to grow only 3% this fiscal – its worst performance in nearly half a century. This comes amid concerns of a global recession.

United States’ State Department spokesperson Ned Price the situation in China is a matter of concern for the world considering the size of the country’s economy.