The question of when China might end its rigid zero-Covid policy is already for two years on the agenda. While a large part of the rest of the world has been helped by a rigorous vaccination program and ended most of the Covid measures, Goldman Sachs expects an end in China at best during the second quarter of 2023, according to this report by Bloomberg.
Goldman Sachs and other agencies have lowered China’s GDP growth expectations for 2023. While few foreign companies have actually left the country, many of the foreign employees and business people seemed to have left, after the lockdowns of earlier 2022 often because they needed to secure education for their children by September. While solid figures are lacking, few replacements seem to return to replace foreigners who have left.
China is unlikely to begin reopening before the second quarter of next year as it tries to put several steps in place first, such as higher vaccination rates for elderly and increased manufacturing of cheap and effective Covid pills, Goldman said.
The authorities may also want to wait until after the Lunar New Year peak travel season and next March’s parliament session when the reshuffling of government officials is completed, before exiting the Covid Zero strategy, the economists wrote.
Any easing of Covid restrictions will probably be followed by a jump in infections, reduced mobility and possible supply chain disruptions, which will curb economic activity, the economists said.
“China is likely to experience a surge in infections upon a full reopening given the lack of infection-induced immunity and the high transmissibility of omicron,” they said. “Therefore, we would expect a modest drag on growth in the first three months of reopening followed by a steep recovery thereafter.”