Goldman Sachs Predicts Early End to China's Zero-COVID Policy Before April Next Year

"Full Economic Activity Expected to Resume in Q2 Next Year"
"China Faces Pressure Amid Failed Pandemic Controls and Expanding Protests"

[Image source=AP Yonhap News]

[Asia Economy Reporter Lee Ji-eun] Global investment bank (IB) Goldman Sachs has forecast that China’s COVID-19 outbreak has spiraled out of control, and that Chinese authorities will end the zero-COVID policy early before April next year and resume economic activities. As protests against the zero-COVID policy erupt across China and concerns over economic recession grow, pressure to end the zero-COVID policy early is increasing.

According to Bloomberg on the 27th (local time), Hui Shan, Goldman Sachs’ chief China economist, said in an interview, "There is a 30% chance that China will end the zero-COVID policy early and resume economic activities before April next year." Previously, until September, Goldman Sachs had analyzed that the probability of China ending the zero-COVID policy early was low.

Hui Shan stated, "Chinese authorities will soon have to choose between stronger lockdown measures and COVID-19 outbreak options," adding, "Local governments in China are struggling to maintain a policy balance of controlling virus spread while complying with new rules announced by the central government."

Protests against the zero-COVID policy spreading across China are also reinforcing the outlook for an early end. According to the Associated Press, on the 26th, protests against COVID-19 prevention policies occurred in Urumqi, Shanghai, and Beijing. Thousands of citizens gathered on the streets of Urumqi Middle Road in Shanghai to hold a memorial for those who died in a fire accident. Citizens shouted slogans such as "Xi Jinping step down" and continued protesting until dawn.

On the same day, over 100 residents in an apartment complex in Chaoyang District, Beijing, held a protest, resulting in the lifting of lockdown measures imposed on the entire complex.

Concerns over worsening economic recession are also cited as reasons why China cannot help but ease the zero-COVID policy. Goldman Sachs stated that cities in "high-risk areas" under strict quarantine measures accounted for 65% of China’s gross domestic product (GDP) as of the 25th. This is a 14 percentage point (P) increase from 51% the previous week. The World Bank (WB) also forecast that China’s economic growth rate for the fourth quarter will be only 3% due to the impact of the COVID-19 outbreak, which is below Bloomberg’s forecast of 3.3%.

However, some argue that it will be difficult for China to lift the zero-COVID policy rapidly. Dan Wang, chief economist at Hang Seng Bank, explained, "Given the spread of COVID-19 in China, the zero-COVID policy will inevitably be eased gradually," adding, "If the policy is eased abruptly, the number of deaths could surge as seen recently in Beijing."

This content was produced with the assistance of AI translation services.