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Corona Situation China

Over the past 30 years of economic liberalization, China has played an increasingly important role in global supply chains, so the stringent COVID19 measures affecting China's vast industrial base have had major implications for operating businesses across the globe. After nearly three years of strict zero covid policy, China's fight against the COVID19 pandemic has reached a new phase: the central government announced a 10-point plan to scale back its strict zero COVID19 policy, with residential lockdowns and quarantines being drastically reduced. In addition, Chinese citizens have no longer present tests for most venues and can travel more freely within the country. Chinese media have reported that the travel code used to determine whether individuals had traveled to areas with COVID19 cases will be officially shut down. Due to the abrupt end of the majority of the measures, covid cases appear to be soaring in major cities.


Possible outcome of the new policy still unclear

Even though the move away from zero COVID19 will be beneficial for most companies in the medium term, experts agree that it won´t bring immediate relief. The current massive increase in the number of infections is likely to lead to further economic turbulence in the coming months. Factories will face disruptions due to labor shortages from employees on sick leave.

With ongoing challenges in the next months, there are additional major uncertainties including the Lunar New Year festival at the end of January. In modern China, most elderly parents still live in rural areas while their children work in cities. The so-called spring migration from the cities to the more remote areas is often referred to as the largest temporary migration in the world. It is the most important travel time of the year in China with over 400 million travelers in pre-pandemic times. There is a risk that it could become a super-spreader event with uncertain outcomes for society and further possible disruptions for the economy.

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