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  • Writer's pictureCrest Economics

China is open for business- December 2022

In a pivot away from strict lockdown guidelines, China is finally opening back up. Mass testing alongside other requirements such as negative test proofs and and movement restrictions are being abolished following protests in a number of major cities. However, the sudden change in policy will certainly carry risks.

The transition risk will be turbulent and difficult to manage. Critics highlight the policy change will reinvigorate viral transmission, increasing the burden to healthcare systems already encumbered by influenza season. Lacking mobilisation plans for the medical system to respond to the anticipated surge is worrisome and promises future strife for emergency services. Ambiguity in the new rules are also likely to spark confusion, and create asymmetries in enforceability across different provinces and jurisdictions.

In addition, vaccine hesitancy is still rampant in China. 40% aged 80 or more have received a third dose of a COVID-19 vaccine, which is expected to creep up slowly especially since much of the ageing population live in rural areas. Broad-based vaccine scepticism is likely to place a further drag on the health system overall, intensifying the possibility of future infection waves. Without curtailing the social stigma, the intended benefit of easing restrictions may not pass on to local businesses through an increase in demand. As such, the impact of these policies may miss their intended mark, and worsen what were already debilitating economic conditions in lock-downed communities.

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