China's zero-Covid policy, botched reopening will puzzle historians for years to come

It has become apparent that mainland China has botched its Covid-19 reopening. After three years of maintaining a strict zero-Covid policy, the surprise at its about-face has been surpassed only by questions as to why such a costly, unsustainable policy was pursued for so long.

Economists and historians will spend years trying to find the answers to three mysteries in relation to China's (mis)handling of the pandemic.

First is the question of what the true costs of the zero-Covid policy were, and in particular, whether they were worth paying.

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Most credible estimates point to more than a million Covid deaths over the next three months. Given the economic damage that zero-Covid wrought - especially in 2022 when the rest of the world had already lifted most pandemic-era restrictions - historians and economists will inevitably ask: what was it all for?

An analysis of zero-Covid's consequences ought to also include direct health costs, especially the excess deaths caused by other conditions not treated as a result zero-Covid restrictions, lost output from economic shutdowns, and the harm caused to people's lives and mental health as a result of extended lockdowns and the sometimes arbitrary quarantining of millions of people.

The second mystery historians will try to solve is why a policy as obviously short-sighted and unsustainable as zero-Covid was maintained for so long and with such ideological fervour.

What happened to the much-vaunted pragmatism, scientific approach and long-term thinking that were the hallmarks of the Chinese state in the first 40 years of reform and opening-up?

When highly effective Covid-19 vaccines arrived in early 2021, zero-Covid came to represent the antithesis of these virtues in governance.

In October 2021, I argued that zero-Covid was a short-sighted policy, pointing out that "if China's borders remain closed to the outside world for the next few years even as the rest of the world progressively gains more immunity to Covid-19, when it eventually opens up, Covid-19 (and whatever variant is circulating then) would come into contact with the world's most Covid-naive population ... It is likely that there will be high levels of infection that could overwhelm China's public hospitals".

Tragically, that prediction came to pass.

It also beggars belief that zero-Covid was abandoned so quickly when China's healthcare system and its under-vaccinated elderly population were clearly ill-prepared for the 180-degree policy change. But it was likely that zero-Covid had been ideologised and pursued so dogmatically that no major part of China's sprawling administrative system had the means, or were even allowed, to get ready to transition to living with Covid.

The failure in preparing for a transition was not just a failure of cognition or imagination; it was also a failure of policy communication.

When zero-Covid was in force, the Chinese propaganda machinery went into hubristic overdrive to play up the dangers of Covid, to denigrate other (especially Western) governments for choosing to live with the virus, and to boast that China's success with Covid-19 showed that its system of government was morally superior to liberal democracy.

This hubris has backfired, and the Chinese state's communications machinery now confronts an increasingly sceptical, distrustful public. Not only did such policy communication breed overconfidence in zero-Covid, it may also have deterred many older Chinese citizens from getting vaccinated.

More subtly, as I also argued in that October 2021 commentary, while the Chinese state is "strong in mobilising public sentiment, in ensuring compliance, and in constructing new infrastructure ... it is considerably less capable in optimising between containment and mitigation measures, in sustaining a high level of investment in public healthcare, and in persuading its people to accept that Covid is here to stay."

"These things require capabilities that authoritarian governments usually lack: a respect for diversity and debate in policy choices, and an active citizenry that has the means to check and question the state," I wrote.

The third mystery that economists may ponder in the future is why a widely anticipated economic rebound, and the resumption of the China growth story after the abandonment of zero-Covid, did not materialise in 2023.

While domestic consumption is likely to grow strongly this year, it could be held back by at least two constraints: income growth has been weakened by higher (youth) unemployment and the job losses caused by zero-Covid, and the property sector remains depressed.

Nearly 70 per cent of Chinese household wealth is locked up in property, and as long as the sector does not rebound strongly, growth in domestic Chinese consumption will be much weaker than it could have been.

While the Chinese authorities are likely to try to support the ailing property sector with looser monetary policy, they are also limited by the larger policy goal of "common prosperity" and the dogma that "housing is for living, not speculation".

That leaves fiscal policy as the main potential vehicle for the Chinese authorities to boost domestic consumption, but recent evidence suggests a deep-seated reluctance to rely on handouts to boost the economy.

Of greater concern is whether and how quickly the scarring done to parts of China's supply chains can be repaired. The capriciousness with which the Chinese authorities imposed lockdowns that disrupted delicate supply chains have made many foreign investors more amenable to the idea of moving away from China, even if this entails higher costs.

Whether the country's reopening will reverse this trend remains to be seen.

Donald Low is senior lecturer and professor of practice in public policy, the director of Leadership and Public Policy Executive Education, and the former director of the Institute for Emerging Market Studies at the Hong Kong University of Science and Technology.

This article originally appeared on the South China Morning Post (SCMP).

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