Here’s Why China May Have Zero GDP Growth This Year

We’ve written at length about the inevitable failure of China’s Zero Covid policy and the huge economic costs. China is determined to shut down the SARS-CoV-2 virus wherever it appears, even though that goal is impossible to achieve.

It’s the equivalent of trying to eliminate the common cold. You can take all the extreme measures you want, but people will still get colds.

China’s policy involves constant testing and monitoring. When a single case appears, the infected individual and everyone he or she came in contact with are immediately quarantined. When more than a few cases appear, an entire apartment building or city block may be locked down. If a few dozen cases appear, an entire city can be locked down with no travelers allowed in or out, all transportation links closed, and businesses restricted. Testing centers are set up every few blocks. Citizens are required to be tested at least once per week, sometimes more.

Everyone has a government app on his or her smartphone that displays a COVID code (red, yellow, or green) based on the latest test or other criteria. Red means you are confined to your house (or relocated to a COVID concentration camp outside the city). Yellow means your movements are highly restricted. Green gives you some freedom of movement with limitations. The government controls the codes and can switch you from green to red remotely and without warning.

All of this has destroyed the Chinese economy. Estimates are that China may actually be in a recession right now. At best, GDP growth is expected to be around zero this year, even if a technical recession is avoided.

China has repeatedly claimed that they “defeated” the virus in one city or another and that things were returning to normal. This happened after recent lockdowns in Beijing and Shanghai. But, such success is always temporary. The virus goes where it wants and quickly returns to major cities even after “success” has been claimed.

The latest example is reported in this article. Macau has just shut its casinos in an effort to cut the spread of COVID. The casino business is the main business in Macau, which is a destination for gamblers from around the world.

Things like the Macau shutdown will keep happening. The only solution to the pandemic is herd immunity as demonstrated by the U.S., UK and EU. But, China can’t achieve herd immunity if it keeps locking down.

China will struggle both on the pandemic front and the economic front as far as the eye can see. That’s bad for China and even worse for the global economy.

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