COVID Surge Impacts Chinese Economy

Case study on recession

Following the protests conducted by Chinese citizens in major cities in China and abroad from late November to early December, the Chinese government shifted away from its stringent COVID-19 control policies. Experts commented that the enormous and threatening power of protests put the government needing to refresh its policies and calm down its citizens.

So now, China's prolonged zero-COVID policy is over. However, because Chinese citizens were living under strict policies until very recently and most of them have never had COVID-19 in the past, the sudden stop on the zero-COVID policy is troubling all places in China. The epidemic of COVID-19 is severe, impacting the economies of trading floors in Beijing and the financial hub of Shanghai. With mass testing halted earlier this month, there is no reliable official data on the number of COVID-19 cases.

According to Reuters, internal surveys by several big asset managers and banks suggest more than half of their employees in Beijing have tested positive for COVID-19. While Beijing is clearly the most affected place in China currently, many companies in Shanghai are also negatively affected. Many senior members of companies are expecting their companies to have smaller growth margins than they expected before. One company used to face one-third of employees working from home due to the strict lockdown in particular places during the zero-COVID period. But now with the abrupt shift in the government's strict rules, all employees are told to work from home because the number of employees with COVID-19 is too large.

While China's economy is likely going shrink due to the shift in its COVID policies, all countries have faced similar situations in the past when the spread of COVID-19 cases was out of control. Additionally, most countries are facing a recession this year as rate hikes are seen jamming brakes on global 2023 earnings growth worldwide. Whether or not COVID-19 spreads, the problem we all face is how to deal with the global recession.

Thank you for reading :) Today, I briefly described the current COVID-19 situation in China and its affected economy. I am hoping the end to COVID-19 will be very soon worldwide.