After Opening Its Markets to the World: Will China Close Its Markets Again?

Nuha Yousef | a year ago

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A sense of optimism, not without fear and anticipation, dominated the global economic scene after China opened its borders and abandoned the zero-COVID policy.

Beijing abandoned the quarantine of those coming to the country and COVID patients in line with health laws.

Since March 2020, anyone entering China has had to undergo mandatory quarantine at a government facility for up to three weeks—recently reduced to five days.

The world's most populous country abandoned its strict Zero-COVID policy last December following unprecedented unrest and protests in many parts of the country.

 

Positive Aspect

On the impact of this step, academic and economist Abdul Rahim al-Hour said: "China constitutes about 19% of the global GDP, and includes the largest industrial sector in the world, and owns the technology of the future, especially 5G technology."

Accordingly, al-Hour explained to TRT Arabic that "any negative or positive move in the Chinese economy will cast a shadow on the global economy."

He added: "We witnessed this with the direct live impact during the Coronavirus pandemic, and the accompanying rise in Chinese exports to all parts of the world, which reflected inflation in all relevant sectors, both direct goods and manufacturing inputs.

"China has a very high sensitivity to the global economy, and therefore its decision to accept the side effects of Coronavirus and open up almost completely to the world will cast a positive shadow on the world, even with weak expectations and betting on economic crises related to armed conflicts around the world," al-Hour said.

Amid these changes, investors hope the reopening will revive the $17 trillion economy, which is suffering its slowest growth in nearly half a century.

China's prolonged lockdown has disrupted supply chains and hurt the flow of trade and investment, amid escalating international crises that have put pressure on countries around the world, such as the war in Ukraine.

On the positive side, experts say China's reopening of borders is a timely move to push global economic growth and movement forward. This decision represents a strong boost to the Chinese economy, especially as the Chinese economy gets back to work.

Opening the markets again means an improvement in the trade balance, an increase in the stock of Chinese exports, an increase in the waves of employment, and positive growth in most sectors, especially trade, and thus an improvement in economic growth rates.

 

COVID U-Turn

But the abrupt decision led to a massive wave of infections that swept through some huge hospitals and caused business disruptions, squeezing China's economy as it struggles to recover.

Although the Chinese government considers that the COVID-19 epidemic has peaked and the worst ended with its preventive measures against the epidemic, there is much doubt about China's account of the spread of the virus, which has burdened its hospitals and crematoriums.

The policy shift, which followed historic protests against the government's zero-COVID policy, unleashed the virus in the country of 1.4 billion people who have been largely safe from it since it first emerged in Wuhan in late 2019.

Some health experts predict more than a million people will die from the disease in China this year, while Britain-based health data company Airfinity predicted on January 20 that the number of COVID deaths would reach 36,000 a day next week.

But the main fear associated with this decision remains the return of new waves of the COVID virus, which re-endangers the economy.

Not to mention the high costs of wages and production due to the lack of labor in periods of labor spread, so China will not be able to meet global demand, as well as expectations of a greater rise in prices.

 

Fears of Recurrence

Fears rise upon opening the Chinese economy amid a shortage of anti-COVID-19 medicines in China following the abrupt lifting of health restrictions. Desperate families are turning to the black market despite scams and exorbitant prices.

Hospitals were filled with elderly patients, while the number of bodies exceeded the capacity of the incinerators.

Pharmacies, for their part, are facing shortages of cold and fever medicines. Many Chinese are avoiding buying products made in their country after the pharmaceutical sector was hit by several scandals that tarnished its reputation.

The situation is leading some to turn to the black market and online traders. While China bans the usage of Despite the risks, some people turned to the internet to get Paxlovid, the anti-COVID drug from US giant Pfizer.

It is difficult for most Chinese to obtain Paxlovid, although authorities say some neighborhood hospitals currently have it.

In Beijing and Shanghai, several institutions contacted by AFP indicated they did not know when the medicines would be delivered. Websites specializing in online drug sales have run out of stock, giving way to scammers and untrusted dealers.

From another negative angle, opening markets means doubling production, thus increasing demand for energy, gas, and oil, and therefore a greater increase in the prices of associated goods, according to the economist.

The reopening of markets with the virus not currently contained—or neither it will be in the future—means a decrease in the number of labor available to work in China, and thus an increase in the wages of workers available for work and a rise in the prices of goods and services globally.

The matter is complicated and not viewed from one angle, and the challenge for China is to be able to control or live with the disease with the return of productivity as it was before, and the non-spread of new waves of the virus.

 

COVID Cases

Between December 8 and January 12, China says there were 59,938 COVID-related deaths across the country.

This statistic, which was released on January 15, was the first update to the country's death toll since lockdown restrictions were lifted last year.

It's a significant increase from the 13 deaths documented the previous month, thanks in part to the inclusion of deaths from underlying diseases as well as respiratory failure induced by COVID.

In China, COVID infections have only been recorded in hospitals and fever clinics for patients with recognized symptoms. Asymptomatic cases and positive home testing kit findings are not noted in the statistics.

Lockdowns and quarantine regulations have both been repealed. To enter public transportation, restaurants, gyms, and other public places, a negative COVID test is no longer necessary (with the exception of orphanages and care homes).

On January 8, China fully opened its borders with no travel restrictions or quarantine measures for arrivals.

The EU this week urged member states to impose COVID testing in China before departure, urging them to complete the move with "random checks" upon arrival on European soil. As a precaution, several countries including the United States, Japan, France, and Germany have already issued similar measures.

Despite the resurgence of the epidemic, Chinese authorities plan to cancel mandatory quarantine upon arrival in China and will again allow Chinese to travel abroad after three years of ban.

For its part, Beijing denounced the imposition of COVID testing by certain countries, calling it "unacceptable" and threatened "retaliatory measures," while the World Health Organization, for its part, criticized Beijing's controversial methods of counting COVID deaths.

Despite overcrowding of Chinese medical facilities and crematoriums, the country has reported a slight number of COVID-related deaths.

The international response comes with the emergence of a highly transmissible variant -already on its way to becoming the dominant strain in the United States- raising concerns about new variants.

So far, no significant differences in severity have been identified between cases caused by the new XBB 5.1 variant and those caused by other variants.

The WHO plans to conduct an updated risk assessment of this variant in the coming days.