The hardest choice! Clearing vs. virus coexistence, how China’s epidemic prevention idea spread to the world

The outbreak of the epidemic in China has forced Shenzhen, Dongguan and other places to impose closures, and 24 million people in Jilin Province have been banned, which is like a “closed province”. This wave of the epidemic has spread to 27 provinces and cities, and its scale is second only to the first outbreak of the epidemic in early 2020, which has once again tested the “zero” epidemic prevention policy of the Beijing authorities.

After the Lunar New Year, the virus spread rapidly. Since the beginning of March, the number of confirmed cases has soared from 100 to 10,000. Zhang Wenhong, head of the Shanghai New Coronary Pneumonia Epidemic Medical Treatment Expert Team, attributed the main reason for the rapid loss of control of the epidemic to the super-infectious Omicron subvariant BA.2, known as an “invisible variant”.

Should the clear continue? Zeng Guang, a Chinese epidemiologist, said recently that China should “coexist with the virus” as its ultimate goal. “BBC Chinese Network” reported that the Chinese government announced the introduction of rapid antigen testing for the first time, which will allow home screening, which may be a precursor to the loosening of restrictions. The fact that China is not cleared is not only related to domestic economic development, but will also have spillover effects on the world.

Clearing, supply chain disruptions may detonate a chain effect
The outbreak of the epidemic in a major industrial city in China may cause economic risks to spill over to the global supply chain and worsen inflation. Parash Jain, global head of shipping and port equity research at HSBC, explained that the pandemic has highlighted “how fragile supply chains can be for any error”. Therefore, any small-scale disruption in China may trigger a “chain effect” globally, and as long as it maintains a very strict epidemic prevention policy, the possibility of supply chain disruption at any time cannot be ruled out.

The blockade also tested local Taiwanese businessmen. Since Shenzhen announced the closure of the city on the 14th, dozens of Taiwanese businessmen were forced to suspend work. Related industries are mainly concentrated in PCB (printed circuit board), electronic components, iPhone assembly, etc. The enterprises include Hon Hai (Note: Partial operations will resume on March 17), Xinxing, Taihong, Jingchengke, Zhending, etc. Already struggling electronics supply chains are tightening even more.

Although most Taiwanese companies said that the shutdown has not had a major impact on operations at present, other factories will support and cooperate with shipments. However, how long this wave of closures will last is still a great potential risk. The outbreak in China could be bigger than reported, adding uncertainty to the situation, former FDA commissioner Scott Gottlieb told CNBC. “The big question is, how many people are infected? How long will the lockdown last?” he said.

In addition, the impact of the closure of the city and the Russian-Ukrainian war may be intertwined. Johannes Schlingmeier, founder and CEO of Container xChange, a German container rental trading platform, said: “Even before the war, freight and container prices were at record highs, but now Russian ports have been cut off, Black Sea shipping has been paralyzed, and the Eurasian railway has been crippled. Transportation has also been hit.” China’s lockdown will further reduce global shipping capacity, leading to higher shipping prices, and the shockwaves will be felt around the world.

According to the Container Availability Index in Shanghai and Ningbo, the two largest Chinese ports have seen an increase in inbound traffic since the lockdown was announced and are expected to soon outpace outbound traffic. Container xChange’s statement pointed out that for the main routes where exports should be greater than imports, it shows that the closure of the city has inevitably brought about the impact of trade bottlenecks.

If it is not cleared, it may “release the virus to the world”
For the sake of global economic performance, there have been constant international calls for China to give up the reset. For example, the managing director of the International Monetary Fund, Kristalina Georgieva, warned in January that China’s zero-removal increasingly looks like a “burden”, which has an impact on the country’s and global economic recovery, and called on China to reassess its epidemic prevention. Strategy.

However, the voice against China’s “not clear” is not small. “Bloomberg” columnist James Mayger pointed out that the longer China sticks to zero, the greater the benefit to the world. This is because once China opens up, there will be a surge in deaths and confirmed cases, and the hit to the economy will be bigger than it is now. Yanzhong Huang, a senior researcher on global health issues at the Council on Foreign Relations, explained that China’s domestic vaccines are not as effective as other mRNA vaccines, and the current success of epidemic prevention means that Chinese society is still facing a “huge immunity gap.”

The article cites a model by researchers at Peking University that shows that if China reopens in a similar way to the United States, it will usher in a “super-large-scale epidemic” unprecedented in countries around the world, with more than 630,000 infections per day, even if the death toll can be maintained. In Japan and South Korea, it is still likely to surpass the official death totals for the past two years.

Leung Cheuk-wai, Dean of the Faculty of Medicine at the University of Hong Kong, pointed out that if China releases its 1.4 billion people from the world, it will become a breeding ground for “new mutant viruses”. “It’s not just a Chinese problem, in fact, it’s a global problem,” he said.

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