Optimizing China's "Dynamic Zero" COVID Policy

The authorities can take the protests as a nudge in the right direction

Zero COVID fatigue has come to China. Frustration over China’s COVID policies boiled over last week following a fire in Urumqi that killed 10 people, most victims allegedly due to the fact that the building was in lockdown. This follows the recent accident in Guangdong, where 27 bus passengers were killed on their way to a quarantine facility. The protest at the Foxconn factory in Zhengzhou was also partly motivated by the COVID measures taken, in addition to more general concerns on labour conditions.

The protests, now reportedly in 15 cities and counting, are the first nationwide protest in decades, and spans students, small business owners and ordinary Chinese citizens. 

Why the protests now? While the new Politburo Standing Committee promised optimization of dynamic zero COVID with a new “20 measures” program, these measures did not represent any end to the policy itself.  The decentralized implementation of the “optimized” strategy, necessary as it is in a country the size of China, caused much confusion, and about-turns in cities that saw a rapid rise of their infection numbers—even though casualties remained very limited.

Policy communication from the top may also have been wanting. In the “interregnum” between 20th Party Congress and the national People’s Congress next March, there is a bit of a vacuum. Leaders such as Premier Li Keqiang and Vice Premier Sun Chunlan, who has played a prominent role in COVID policies including the lockdown of Shanghai, are no longer part of the new Politburo. Sun has been less visibly leading the new policy directions, thus leaving local officials in limbo on how to implement them.

Finally, the footage from the football world cup has shown Chinese citizens that the rest of the world has moved on, despite the apparent attempt of Chinese TV to avoid footage of the hundreds of thousands of unmasked supporters gathered in Qatar.

The protests come after almost three years of COVID measures. These were very effective in the early days, and China still has an admirable record of only some 5,000 deaths, compared to over a million in the United States. At the same time, death from other causes are up in part because people cannot get timely treatment for their treatments. 

A study on excess deaths during COVID published in the Lancet in March this year suggests that China’s numbers are still low, but some 3 times higher than officially reported COVID deaths. In contrast, countries such as Singapore and Korea showed negative excess deaths, because their measures to prevent COVID also prevent death from other diseases and access to critical care remained available.  Even so, success of China’s COVID policies in preventing casualties has been impressive.

The real casualty has been the economy. China’s COVID policies in the early days, and similar policies elsewhere in Asia, enabled the economy to open up early. The economy started to recover from the third quarter of 2020, before any other country, barely 6 months after the Wuhan outbreak. Economic goals and health goals were aligned at the time. 

New, more infectious COVID variants and widespread availability of effective vaccines has changed that equation for most countries, and most decided to open up, some chaotically so.  Not in China. The commitment to zero COVID has, however, become far more expensive in economic terms, as the new variants required more frequent and more stringent lockdowns, which affected the economy, in particular the services sector—a sector that, far more than manufacturing, requires people to meet face to face.

It is the young that are particularly frustrated, as they are most hit by the impact of COVID measures on the economy. Youth unemployment peaked at almost 20 percent some months ago, and major companies, in particular consumer tech companies and e-commerce are not hiring after the regulatory crackdown of the past years. Meanwhile, government policies continue to support infrastructure and manufacturing, while providing only modest support for consumption.

In particular, the labour intensive services sector has been hurting. This includes many mom-and-pop shops and restaurants that provide jobs for in particular migrants, but also high value property, finance, and consumer tech—sectors in which previously the rapidly rising number of university graduates found their jobs.

The class of 2022 graduates into a very different economy, with growth to reach barely 3 percent this year according to the IMF, well below potential growth. 

There is little doubt that China’s security apparatus can manage the current level of protests, and thus far they have shown restraint. This may change if the protests were to spread further, but irrespective, controlling the unrest will not take away the frustration, nor revamp economic growth. 

Revamping growth will require more consumption. China’s recovery after the first wave of COVID relied disproportionally on exports of manufactured goods and on infrastructure.  Now, the world economy is cooling and local governments are weary of investing more, as the property downturn is squeezing their revenues.

In the short term, this means restoring consumer confidence; which has hit an all-time low amidst COVID measures. To restore confidence, recalibrating COVID policies are key.

China’s authorities will need to decide whether they are ready to move faster on COVID. Shifting towards a “living with COVID” policy would do wonders for confidence, but is probably still a bridge too far.

However, significant changes are feasible within the context of zero COVID.  Indeed, the 20 points plan was a step towards more flexibility.  Further policy calibration can still aim for “Dynamic Zero COVID,” but priorities will need to change.

The first priority is vaccination. Vaccinating the elderly, most prone to severe COVID and death, is particularly important, but the number of fully vaccinated elderly over 60 years of age has been stuck at around 67 percent for months—too low to safely open.

Some have argued that the Chinese vaccines are less effective, but research suggests that 3 shots of Sinovac are as effective as mRNA vaccines. Unfortunately, China may be victim of its past success, as many elderly see little need for vaccination with “zero COVID” being heralded as the result of superior Chinese governance.  

Interestingly, on Tuesday 29 November the first press conference after the protests of the State Council “Joint Prevention and Control Mechanism” focused on vaccination, aside from implementing the 20 measures program more thoroughly.

A second is to reconsider the policy of isolating COVID cases in special facilities. Countries such as Singapore phased out isolation early on as home isolation was seen to be as effective, much less disruptive for the individual, and far less of a burden for the health system.

A third is a shift of resources away from testing and containment towards vaccination and support for those in home isolation. Performative policies such as testing fish and clams on the market, and walling off buildings and streets have no scientific basis, and the people engaged in this can be much better employed elsewhere.

A final, and perhaps most important change is a change in communication. First and foremost, local leaders should be clear on what the tolerance level of the centre is within the context of new policies.  Until then, they will simply revert to lockdowns and restrictions as soon as infections go up, as this is the safest way to protect their career.

Communication to China’s citizens is as important, not least to signal that new variants of COVID are not that scary and that vaccinations are safe (footage of a leader getting booster shot would do wonders!), and that staying rather than clogging the hospitals is the best thing to do. Communications should also paint a perspective for a better future, once a more flexible policy is showing success.

China has the state capacity to pursue this alternative path. It will require political skills to pull it off, though, and a tolerance for more COVID casualties to save the economy. The protests may well be the nudge needed, as they suggest that China has the choice between an orderly and a disorderly exit from Zero COVID.