But during an annual pre-recorded New Years Eve address broadcast by state television on Saturday, China’s most powerful leader since Mao Zedong finally made a call for unity while defending his handling of the pandemic.

“Since the outbreak of the epidemic, we have always put people first and life first, adhered to scientific and precise prevention and control, optimised and adjusted prevention and control measures according to the time and situation, and maximised the protection of people’s lives and health,” he said.

Countries including the US, Italy and Japan imposed negative Covid test requirements for air passengers from China amid a dearth of reliable official data from Beijing and rising fears of new mutations of the virus.

Elizabeth Freund Larus, an adjunct fellow at the Pacific Forum, a US foreign policy research institute, said the measures highlighted a “lack of trust” in Xi’s administration.

“US officials believe that the Chinese government has been less than forthcoming about the origins of Covid-19 and less than truthful about the number of positive Covid cases in China,” she said.

“The Chinese government allowed millions of tourists to travel domestically and abroad for lunar new year in 2020 knowing that there was a new coronavirus infecting the population. When the mortality and infection rate became evident . . . it was already out of control in the US.

“Washington is not going to make the same mistake twice.”

Additional reporting by Xinning Liu and Ryan McMorrow in Beijing

This story originally appeared on: Financial Times - Author:Edward White

Official statistics on Friday revealed no new deaths and only 16,363 locally transmitted coronavirus cases in China, less than half the peak caseload reported last month.

That is despite a stunning U-turn over the past week to relax President Xi Jinping’s heavy-handed pandemic controls, which means the virus is certain to spread.

The situation echoes the dearth of official information during the disastrous initial outbreak in Wuhan nearly three years ago. Local officials and analysts warned that the reduced testing, as well as gaps in reporting of both cases and deaths, would make it harder to assess the risk to the world’s second-biggest economy.

“The behaviour of case numbers is very similar to 2020, where we had one [to] two weeks with genuine case numbers, before the veil was drawn,” said Rodney Jones, principal at Wigram Capital Advisors, an Asia-focused macroeconomic advisory group.

However, public anxiety is increasing about the healthcare system’s capacity to handle a big rise in Covid cases and the discrepancy between the official narrative and reality.

“We should address the problem — either report real figures or stop publishing them,” Hu Xijin, a former editor of the Global Times, a nationalist tabloid, wrote in a social media post, adding that disseminating “severely distorted figures to the public” was damaging the authority of official information.

Hospitals in Beijing have started running out of medical supplies, including ibuprofen and paracetamol, as health workers fight an outbreak spreading rapidly through the Chinese capital. Yet the Chinese capital reported just 2,654 official new infections on Friday for the day prior.

Ben Cowling, a professor of epidemiology at the University of Hong Kong, warned of the risks of abandoning testing requirements and reporting cases inaccurately.

“As testing intensity is reduced, it will be more difficult to maintain situational awareness of the level of infections in the community, and interpretation of case counts will be more nuanced,” he said.

Yanzhong Huang at the Council for Foreign Relations think-tank, noted that after the November surge in cases, there were “so many asymptomatic cases and so few severe cases”.

“That is puzzling,” he said. “Does that mean they have a different way of counting Covid-related deaths?”

Others maintained that after nearly three years, the costs of mass testing, coupled with China’s contact tracing system, had become unsustainable.

As local government coffers dried up, the decision to depart from mass testing was essentially forced upon Beijing, said Sam Radwan, principal at Enhance International, a consultancy.

“Beijing Social Insurance Fund Management Center has run out of money. They’re having a hard time paying bills for the first time in a very long time,” Radwan said, referring to the capital’s agency responsible for funding health services.

“That’s why you were seeing they’re shutting down testing booths before they’re removing the restrictions.”

Additional reporting by William Langley, Andy Lin, Gloria Li and Eleanor Olcott in Hong Kong

This story originally appeared on: Financial Times - Author:Edward White

A little over two years later and, far from beating the pandemic, China is suffering record cases and lockdowns, its Covid-19 policy is confused and it has no clear exit path given the country’s low vaccination rates among the elderly and its healthcare vulnerabilities.

With the economic and social costs mounting from conflicting policy directives, Beijing needs to set explicit criteria for reopening based on vaccination coverage and the availability of intensive care units for treating an inevitable exit wave of cases, according to Yu Jie, a senior research fellow at Chatham House, a UK think-tank.

A big problem lies in Chinese culture, which is more risk-averse than many other countries when it comes to diseases and vaccines, said Xinran Andy Chen, an analyst at China consultancy Trivium.

While a relatively high vaccine hesitancy rate among China’s elderly population predates the pandemic, the problem has been exacerbated by official messaging about the dangers of Covid over the past two-and-a-half years.

Despite the Communist party’s enormous powers of social control, ordering the elderly to vaccinate is viewed as a step too far, even for Xi, because of fears it would spark “dramatic social resistance”.

“They don’t want to force through a vaccine mandate [but] they can’t afford old people dying. So that is why stringent Covid controls are still in place,” Chen said.

As case numbers soar, there are increasing signs of central intervention in cities across China, meaning a return to mass testing and quarantine.

In one example, following an inspection this week of the south-western megacity of Chongqing, vice-premier Sun Chunlan, who is Xi’s top zero-Covid enforcer, ordered officials to eliminate all community transmission in eight days.

That target, a local official said, was “impossible” to meet, meaning the situation risked mirroring events in Shanghai this spring when an initial two-day lockdown persisted for two months.

Another challenge to China changing course on zero-Covid would be the government narrative. Authorities need a different message to convince a fearful public that it is possible to live with the virus.

Hu Xijin, a former editor of the Global Times, a nationalist newspaper, told the Financial Times that ordinary Chinese people were “very worried” about the risks of infection, especially the dangers to children and the elderly, as well as the threat of quarantine.

Hu, who is in quarantine himself, said state media had not intentionally run campaigns to emphasise the dangers of the virus. “I never received such instructions during my final two years as the editor-in-chief,” he said.

However, he said that after watching the handling of the pandemic in the US and much of the west — and the high death toll — many Chinese gained a strong “sense of pride” in the country’s zero-Covid response.

Liqian Ren, who manages China investments at US-based WisdomTree Asset Management, believes abandoning zero-Covid must be preceded by a stark shift in domestic messaging from the very top: Xi himself.

“The propaganda machine needs to change, to say ‘this is not a scary disease’, to say ‘we have hospitals’ and ‘this is the success of the party’,” she said.

Underscoring the shortcomings of China’s healthcare system, the Asian Development Bank last month approved a $300mn loan to improve public health services in two of China’s poorer regions. Its experts noted that the pandemic had highlighted “gaps” in the state-funded health system and shown that China’s hospitals were “particularly vulnerable to admission surges”.

Ben Cowling, a professor of epidemiology at the University of Hong Kong, said China’s healthcare system risked being overwhelmed like that of Hong Kong earlier this year if it did not follow the likes of Singapore in preparing for an exit. That would involve radically changing the zero-Covid rules so that only severe cases were hospitalised.

“In Hong Kong, there was no concrete plan for exit; even in early March of 2022 [at the height of a big outbreak], there was still isolation of very mild cases in hospital and in isolation facilities when the resources should have been saved for the more severe ones,” he said. “The preparation makes a big difference.”

Others are less pessimistic. Ryan Manuel, managing director of Bilby, a consultancy that analyses Chinese government documents, said Beijing had signalled that it would ultimately embark on a staged reopening based on the ability to parachute in medical support teams from around the nation.

While this meant that any reopening would be “piecemeal”, it also meant “there won’t be a wholesale ‘let it rip’”, Manuel said.

Additional reporting by Maiqi Ding in Beijing and Eleanor Olcott in Hong Kong

This story originally appeared on: Financial Times - Author:Edward White

Public records show accounts receivable at the country’s 11 main PCR testing companies soared nearly 90 per cent year on year to hit Rmb38bn ($5.4bn) in September.

The payment delays raise questions about the financial sustainability of the zero-Covid policy, which relies on large swaths of the population taking PCR tests every few days, mostly paid for by local governments.

This story originally appeared on: Financial Times - Author:Edward White