China’s Continued COVID Struggles May Have Global Economic Effects

China’s prolonged struggle with COVID may have far-reaching effects around the globe, despite many countries’ hope that the pandemic’s worst days have passed.

Recent protests against Beijing’s strict zero-COVID policies have brought about renewed concerns regarding the lockdown’s effects on China’s economy and therefore, the global economy.

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New COVID cases have risen daily, eclipsing the numbers seen during a lockdown in Shanghai early in 2022. The government’s stringent methods for tamping down contact and transmission of the disease are exhausting China’s more than 1.4 billion inhabitants and creating economic troubles for the country.

“Sticking with zero-COVID would require strict local lockdowns in areas where outbreaks are happening. Right now, these areas generate nearly two-thirds of China’s GDP,” Mark Williams, Chief Asia Economist at the consultancy Capital Economics, told The Guardian.

A quick removal of restrictions might increase cases, causing stress on the healthcare system, which would then require another lockdown. The vicious cycle could impact the economy just the same as it did at the start of the outbreak in 2020.

Beyond China, the lockdowns could again restrict the global supply chain, as the country has played a significant role in the past 30 years in the dispersal of goods. Western factories have struggled to receive deliveries from China, which have been severely delayed due to its workforce having been quarantined at home. Western companies have also experienced shortages of key components and exorbitant freight costs.

“What’s happening in China reminds us of the fact that COVID is still a really big live issue in the world’s second-biggest economy,” Ian Stewart, Chief Economist at Deloitte, told The Guardian.

The number of new daily coronavirus cases reached nearly 80,000 in February and March. That number later dropped off, but rose again to more than 60,000 in early November.