China humiliated as Zero Covid policy spectacularly backfires and cripples economy

China: Xian enters lockdown after Coronavirus cases surge

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This comes as analysts say border restrictions could remain in place for the entirety of 2022 as the country gears up for important international events. A team at Goldman Sachs Group Inc predicted this week that quarantine measures for international arrivals would likely be maintained to safeguard against outbreaks of coronavirus during the upcoming Winter Olympics, as well as significant political milestones, such as the 20th Communist Party Congress.

Ahead of this congress towards the end of the year, “we doubt policymakers would eliminate quarantines before then”, the analysts added.

They said: “With transmission typically higher in the winter months, it’s possible that border restrictions could be kept largely intact until spring 2023.”

China is currently enforcing its Covid Zero strategy, compared with much of the rest of the world which is adjusting to cohabiting with the virus.

Mass testing with entire areas in strict lockdowns has become a common feature of the country’s approach to combating the spread of the virus.

However, “an early end to China’s zero-Covid policy would help boost activity further now, enabling the economy to have a good chance to grow at its annual trend rate of 5.5 percent in 2022”, according to the Bank of Singapore’s chief economist.

Writing in the Financial Times, Mansoor Mohi-uddin added: “But Beijing is unlikely to abandon its strategy after the National People’s Congress in March.

“Instead, China is set to maintain its stance until the 20th National Party Congress is held in November.”

He continued: “Investors should prepare for strict lockdowns and closed borders in China to continue throughout the year.

“The consequences for global markets are likely to be significant.”

He predicted: “The country’s GDP growth may fall below its trend rate in 2022, restricting demand for commodities.

“The absence of Chinese travellers abroad would also keep affecting tourism-dependent economies across the Asia-Pacific region.”

Heightening the economic uncertainty is the teetering real estate giant, China Evergrande Group, as anxious investors rush to regain some of their money from the debt-wracked company.

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A number of those who bought into Evergrande’s wealth management products gathered at the company’s building in Guangzhou on Tuesday.

Around 100 people surrounded the company’s offices to chant: “Evergrande, return our money!”

This echoed the demands heard when the state of Evergrande’s affairs became known last year.

Shares in Evergrande dropped by almost 90 percent last year as investors became increasingly worried about the security of their investments after curtails to the real estate sector by the ruling Chinese Community Party.

Evergrande was heavily embedded in the Chinese economy, and onlookers worry that the effect of a collapse could be similar to that of the Lehman Brothers in the US.

It could also have a significant ripple effect on the property and real estate sectors which account for up to 30 percent of China’s GDP.

Adding to the uncertainty is concern over the effectiveness of the Chinese-made COVID-19 vaccine, Sinovac, which initial studies show is largely ineffective against the Omicron variant.

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