If this writer has continued to give the mainland authorities the benefit of the doubt in terms of managing the downturn in the residential property sector, for the simple reason that the central government induced the crisis itself and therefore should be prepared to deal with the resulting fall out, there is another issue which has become much more of a concern of late as regards China.

This is whether China’s Covid suppression policy, which has up until now been so successful during the pandemic in terms of the small number of cases and deaths compared with the Western world, remains a practical strategy going forward in the context of the highly infectious Omicron.

With Omicron it will be much harder for China to control localised outbreaks when so many of the infected may not even have symptoms.

There is also the related sensitive issue of the efficacy of China’s vaccines.

A Change in COVID Policy Isn’t Likely Until After the 20th National Congress

Certainly, no major change in policy towards the pandemic should be expected prior to the completion of the Winter Olympics which commenced in Beijing on 4 February and end on 20 February.

Still, after that there is a real question of whether some sort of a change of policy will be required.

But that has political implications given President Xi Jinping is closely associated with the successful policy and is due to be reappointed to the top job at the 20th National Congress of the Chinese Communist Party to be held in November.

For to adopt a materially more relaxed policy towards Covid risks, from his standpoint, a potentially politically unacceptable rise in cases and deaths.

There is also the cultural issue of “face”, in terms of implementing such a policy U-turn.

Meanwhile, the policy has clearly been very popular with Chinese people.

A reminder of this reality came with the publication last month of the annual “trust barometer” global survey carried out by Edelman, a long-established American public relations firm.

The results are startling and worth repeating for those who missed them.

The survey found that trust in the Chinese government is at a record 91%, the highest in a decade and up from 82% in the 2021 survey.

This compares with 39% in America, down from 42% in 2021.

2022 Edelman Trust Barometer: Trust in government

Note: Fieldwork conducted: 1-24 November 2021. Source: Edelman: Annual Trust Barometer Survey

COVID Suppression is Negative For Consumption Growth

Still, the continuing Covid suppression policy is one that needs careful monitoring in terms of the potentially negative impact on China, in particular on consumption growth.

As regards the official policy toward the pandemic Professor Liang Wannian, the head of the National Health Commission’s expert panel on Covid, stated in a press conference in Beijing held on 11 December that the policy was not “zero infection” but what he called “dynamic clearing” where the pandemic is quickly extinguished where local cases appear.

To quote from a Google translation of his statement, he said: “We do not yet have the ability to prevent a local case from appearing, but we have the ability and confidence to quickly extinguish the epidemic when a local case is found.”

Clearly, the issue is whether such confidence is still justified, or indeed practical, in the context of Omicron.

For the record, there have reportedly been more than 300 cases of Omicron in China while at least eight provinces have found locally transmitted Omicron infections.

Still, the real number of Omicron cases remains unclear as many provinces do not report such data.

For example, the city of Baise in Guangxi province on the border with Vietnam has put 3.6m residents under strict lockdown since 7 February, following the discovery of an Omicron case.

Baise also ordered citywide mass Covid screening last Friday after reporting 33 more cases, bringing its total in this outbreak to 220 infections.

Residents are banned from leaving their homes except for mass testing, while public transport is suspended.

All the cases in Baise appeared to be the Omicron variant, according to the Guangxi health commission.

Still, the new Covid case count in China has receded from the recent peak.

The 7-day average daily new Covid case count is now 84, down from a recent peak of 206 at the end of 2021.

China daily new Covid cases

Source: National Health Commission

Will China Follow East Asia’s Reopening Lead?

Meanwhile, it is possible that a change in China’s policy comes sooner than many now expect.

Certainly more and more East Asian countries are opening up to vaccinated visitors without demanding quarantines.

If Singapore was the first to introduce such a policy, Vietnam has opened up to selected countries since late November and plans to reopen fully by the end of April.

Malaysia made a similar announcement last week while quarantines are also no longer required in Thailand from 1 February.

Thus, Malaysia’s National Recovery Council recommended on 8 February a full reopening of the nation’s borders to vaccinated travelers by March.

The Philippines has also reopened borders to fully vaccinated visitors from 10 February.

True, as already noted, China has not relaxed in any meaningful way yet.

While Hong Kong doubled down on its attempt to suppress Covid by announcing further tightening measures last week.

The cap on public gatherings was tightened to two persons, while private gatherings of more than two households were also banned.

Hong Kong will be interesting to monitor.

With new Covid cases, mainly Omicron, surging to a record 1,514 on 12 February and doubtless heading much higher in the short term, it will be interesting to see how long this policy can continue before the government admits defeat.

Hong Kong daily new Covid cases

Source: Centre for Health Protection

Indeed the Hong Kong example may provide a convenient precedent or “out” for a China relaxation in coming weeks.

Meanwhile in rival city-state Singapore, probably the best indication that the government has chosen to live with Covid was the decision announced on 27 January to hold the Singapore Grand Prix on 2 October after a two-year absence.

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