China’s Zero Covid Policy Is Past The Point Of Lunacy.

A new report from China suggests that the COVID lockdowns in Shanghai may soon be over. Don’t believe it. The lockdowns will continue and grow worse.

China has been pursuing what they call a Zero Covid policy. This is a more extreme and idiotic version of the mask mandates and lockdowns that plagued the United States through most of 2020 and 2021.

When a single case of COVID is reported in a Chinese city, an entire apartment building or neighborhood can be forced into mandatory quarantine with no one allowed outside. Daily testing is then required.

When several cases emerge in close proximity, the entire section of town may be locked down and thousands who came in close proximity to the infected individuals may be sent to COVID concentration camps set up outside the city for a two-week quarantine. Businesses are closed, transportation is shut down and no travelers are allowed in or out without special permission and continual testing.

This was done recently in Shanghai, a city of 26 million people, and is also now being done in Beijing, a city of 22 million people. The economic impact is incalculable.

China may have zero growth in GDP in the first half of 2022 after decades of 10% or greater compound growth. China’s policies are doomed to fail.

Lockdowns and masks don’t work; the virus goes where it wants. Vaccines don’t prevent infection and don’t stop the spread (they may reduce severe symptoms in some cases). The only solution to the pandemic is actually getting the disease. Most cases are mild, some are entirely asymptomatic.

The disease is the vaccine. The 99.7% who recover from the disease without difficulty (about the same as the flu) have antibodies that prevent further severe symptoms better than the so-called vaccines. The end result is herd immunity.

The virus eventually morphs into less lethal forms and we all learn to live with it like the common cold. China has never done this. It means that the Chinese population does not have herd immunity and is highly vulnerable to the omicron variant and other more lethal forms of the SARS-CoV-2 virus.

China’s Zero Covid policy is a double failure. On the one hand, it does not stop the spread except at the cost of practically shutting down the world’s second-largest economy and making the population prisoners in their own homes. On the other hand, these extreme measures prevent the Chinese population from gaining herd immunity, which is the only solution.

Investors should expect ongoing lockdowns in Shanghai and Beijing and eventually other major cities. Just as citizens try to avoid the virus, investors should avoid Chinese stocks. Both are dangerous these days.

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