China Steps Up Covid Tests as US Envoy Warns of Investment Chill

China’s biggest cities are doubling down on Covid-19 testing in a bid to stamp out persistent infections, as the US ambassador to the country warns the zero-tolerance approach is likely to last beyond this year and actively chill foreign investment.

In Beijing, workers in key sectors including schools, hospitals and supermarkets, as well as delivery drivers and even people who live near airports with inbound flights will need to be tested more often, the local government said at a briefing Thursday. Shanghai this week announced plans to test the entire city every weekend until the end of July to stamp out the virus. Residential complexes where infections are found will be temporarily locked down.

The mass-testing drives come even as cases in China remain low in comparison to the rest of the world, which has largely dismantled restrictions and is living with the virus as endemic. Beijing reported 22 cases for Thursday, while Shanghai recorded just four cases, all of which were in government-run quarantine centers.

China is increasingly relying on frequent mass testing to stick to its Covid Zero stance in the face of the hyper-infectious omicron variant. Tens of thousands of lab testing booths are being set up across large cities to allow regular swabbing to help uncover infection chains early and avert economically-crushing lockdowns.

However, the approach, which also includes travel restrictions and isolating close contacts in government-run quarantine centers is leaving China isolated from the rest of the world, and exacting a heavy economic and social cost.

America’s ambassador to China said Thursday the country’s stringent Covid Zero policy is likely to run into next year and is actively discouraging US and European investment in the world’s second-biggest economy.

“My honest assumption is that we’ll see the continuation of ‘zero Covid’ probably into the beginning months of 2023 — that’s what the Chinese government is signaling,” Nicholas Burns, the American envoy in Beijing, said during an online event.

Although the Chinese market is too important for foreign companies to leave entirely, Burns said that local chamber of commerce surveys and conversations suggest companies remain uncertain about investing further given uncertainties — particularly over Covid travel rules, Burns added.

“We don’t see a lot of companies leaving lock, stock and barrel, but from the results that I’ve read, and the conversations had with lots of business leaders here, I think there’s a hesitancy to invest in future obligations until they can see the end of this,” he said at the event hosted by the Brookings Institution think-tank.

Chinese officials are betting the cost of testing and the small-scale disruption to daily life — tests can take just minutes — will be far less than the hit of shutting down cities. Shanghai’s lockdown came after a sluggish initial response to its outbreak and roiled global supply chains as companies like Tesla Inc. halted or delayed production for weeks.

But for residents, frequent mass testing means living with the constant threat of being ensnared in a building-specific lockdown should even one positive case be detected. That’s likely to further weigh on consumer spending and risks putting the government’s full-year economic growth target of around 5.5% further out of reach.

Source: Bloomberg