Beijing’s zero-Covid strategy could hit supply chains
The lifting or absence of restrictions in Europe and the U.S. signals a greater willingness to live with the virus, while remaining alert to its dangers. That is not yet an option where populations have received vaccines that offer very limited protection against Omicron, as is the case in China.
That is part of the reason why China continues to pursue a “zero-Covid” strategy, which requires strict lockdowns when local outbreaks occur.
China is the world’s leading supplier of the parts other manufacturers use to make the products households buy, which are known by economists as intermediate goods. Should it have to lock down significant parts of its economy, the impact would likely be felt in lower growth and higher inflation in Western economies.
China would likely face a surge in deaths if it were to abandon the zero-Covid strategy now. About 86% of China’s population has been fully vaccinated, but the vaccines most widely used, developed by Sinopharm and Sinovac, use inactivated virus. Those are widely believed to be less effective against Omicron infections than the mRNA vaccines developed by Moderna Inc. and by Pfizer Inc. with BioNTech SE.
China is accelerating its efforts to produce domestic mRNA vaccines and medicines for Covid-19, said an official familiar with the matter. If it were to be successful, the need for lockdowns would become less pressing. But few expect a shift away from zero-Covid to happen soon.
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