Goldman predicts China will stick to Covid zero even after Communist Party meeting

GOLDMAN Sachs Group Inc. sees China persisting with its zero-tolerance approach to Covid-19 following a key Communist Party meeting next month, with the bank’s economists playing down expectations of any major policy shifts immediately after the congress.

Stability will be the prevailing narrative in the lead-up to the meeting of China’s top leaders, where President Xi Jinping is expected to secure a precedent-breaking third term, economists including Goldman’s China lead Hui Shan wrote in a report published Tuesday. This is why Covid containment measures, especially around the capital, have been intensified in recent days, they said, with areas near to Beijing locked down, rules around virus testing tightened and domestic travel discouraged over the next month.

The once-in-five-years summit will be mainly focused on reshuffling the party leadership, the Goldman economists wrote, with a pivot away from Covid Zero — China’s ongoing strategy of containing the virus with lockdowns, mass testing and border controls — not likely until after the annual National People’s Congress some time in the first half of next year.

China watchers have been slowly downgrading expectations for the dismantling of Covid Zero, with Xi emphasizing his commitment to the approach in recent months and officials enforcing more lockdowns this year than at any time during the pandemic. While countries like Singapore and New Zealand used to pursue virus elimination, they’ve since shifted to living with it like the US and Europe, leaving China increasingly isolated as it continues to prioritize preventing deaths at any cost.

Disruptive Strategy

Some experts see China persisting with the disruptive strategy long term, given the country’s low elderly vaccination rates and less effective Covid inoculations.

China reported 915 new Covid cases for Monday, coming in below 1,000 infections for a second day. That included 16 in Beijing, which has seen flareups in a number of colleges and a high school in recent days. All of the capital’s cases were already in quarantine. China isolates all Covid infections and their close contacts as a way of stopping community transmission, a strategy perfected during the original Wuhan outbreak and still being pursued.

With more than 2,000 delegates due to descend on Beijing for the congress Oct. 16, authorities aren’t taking any chances with Covid. A district of Shijiazhuang, the capital of the neighboring Hebei province, was locked down from 6am local time Tuesday, and the area of Sanhe will also be subject to a stay-at-home order, after a resident tested positive for the virus.

Other parts of China, from areas in Xinjiang in the northwest to Guiyang, a city of some 6 million residents in the south, are also locked down and subject to repeated mass testing efforts. Testing has become core to China sustaining Covid Zero, with negative tests required to enter workplaces, public transport and even parks in some parts of the country. The megacity of Chengdu in the southwest, home to some 21 million people, also largely remain locked down.

China’s virus czar, Vice Premier Sun Chunlan, reiterated Xi’s line in a meeting of the national Covid taskforce on Friday, saying that preventing sizable outbreaks while ensuring economic stability was the country’s chief goal right now, especially ahead of the congress. After the meeting, China’s provincial and city governments held teleconferences to reinforce the messaging over the weekend. –BLOOMBERG