High costs spark debates on benefits of mass screening
While some local governments have begun adjusting mass testing mandated under Beijing’s zeroCovid policy, its widespread use to contain the highly transmissible Omicron variant continues to take a sharp toll on finances and consumer sentiment, analysts say.
Whether local governments can afford to press on with free mass screening has been a subject of debate in China.
On the one hand, questions have been raised about the longterm costs, whereas on the other, Beijing considers the programme an effective alternative to lockdowns, which have badly hurt economic growth.
Citing harsh coronavirus containment rules, many analysts have downgraded their national economic growth forecasts this year to below Beijing’s target of “around 5.5 per cent”.
Yao Yang, an economist and professor with the National School of Development at Peking University, said the cost of maintaining zero Covid was too high as it continued to restrict mobility, particularly in the key hubs of Shanghai and Beijing, which would have a severe impact on the economy.
With the rest of the world easing travel restrictions, China should avoid isolating itself through its virus control measures, Yao said.
“We need to come up with a long-term effective prevention plan,” he said.
Many local governments have been spending heavily to control the spread of Covid-19, including establishing testing sites that are within 15 minutes’ walk of residents’ homes.
China Merchant Securities estimated the cost of the mass nucleic acid testing in Shenzhen between April 6 and June 5 was around 3.16 billion yuan (HK$3.69 billion).
“From the perspective of economic benefits, the lockdown in Shanghai may cost China a loss of at least about 1 trillion yuan in gross domestic product this year,” the brokerage said in a report published this month.
“If the cost of regular nucleic acid testing in Shenzhen is significantly lower than the economic and social losses caused by the lockdowns of Shanghai, then regular nucleic acid testing should be promoted nationwide.”
For now, Covid-19 control remains the priority for many local governments despite the financial burden on regions with weaker economies.
While some have chosen to ease mandatory testing, a single case could trigger its return.
Hefei, the capital of Anhui province, on Monday said it would conduct mass screening again over the next three days after it found one positive case from a visitor – less than seven days after it suspended its weekly testing programme.
On the same day, Quzhou in Zhejiang province said it would suspend its weekly testing from yesterday. However, workers in the service sector still need to test every three to seven days.
Shanghai, which emerged from a two-month citywide lockdown only at the start of June, has extended its mass screening programme until the end of July. The city government has also pledged to spend 300 billion yuan to rescue its economy.
Beijing, meanwhile, requires residents to conduct nucleic acid tests to use public transport or enter public venues.
Rating agency Moody’s Investors Service expects a significant regional and local government budget deficit in 2022, mainly a result of Covid-19 outbreaks.
“Expenditure will probably remain high, a result of greater healthcare and social security spending to ease the effects of coronavirus-related disruptions,” Moody’s said in a note on June 14.
Yao said recent support measures that focused on boosting supply through infrastructure spending might not be enough to meet the 2022 growth target.
“Right now, [the policy focus on] supply is much bigger than on demand,” Yao said last week.
He said poor credit demand by companies, uncertainty over the pandemic and a slump in the property market showed consumption was in a dire state.