More large-scale Covid lockdowns in China could cause heavy economic losses, five economists from Chinese and U.S. universities have said in a recent paper.
Using real-time truck flow data within the country to measure the impact of lockdowns, the authors estimated that if the four largest cities — Beijing, Guangzhou, Shanghai and Shenzhen — underwent a full one-month lockdown, the country’s real GDP, or inflation-adjusted GDP, could fall 8.6% during that period, according to the paper published on April 3.
This would translate into a 0.7% to 0.75% drop in annual GDP, Song Zheng, a co-author of the paper and economics professor at the Chinese University of Hong Kong, told Caixin.
In the worst-case scenario of a month-long lockdown of all cities, the national real GDP could shrink 53% during that period, according to the paper.
The paper also compares China’s lockdown measures with several Western countries, predicting that the economic losses caused by Chinese lockdowns are four times as large as those caused by lockdowns in Italy and Canada.
Song said that a major reason for the greater economic cost of a lockdown in China is its higher level of strictness and enforceability of lockdown measures.
As of Monday, a total of 45 cities in China were under full or partial lockdowns. They make up 26.4% of the country’s population and 40.3% of its GDP, economists at Nomura Holdings Inc. wrote in a report that day.
The full impact of China’s strict implementation of its zero-covid strategy may go beyond these figures, the economists said, as many other cities have been carrying out mass testing district by district, and mobility has been significantly restricted in most parts of the country.
Reduced consumer spending, less government investment in other areas as a result of massive fiscal outlays used to fight the pandemic, and a potential decline in foreign direct investment due to limited cross-border travel could all contribute to higher economic costs inflicted by the stringent Covid-19 policy this year than in 2020, they wrote.
Read more Analysts Cut Estimates for China’s GDP Growth Amid Covid Surge
Contact reporters Kelsey Cheng (kelseycheng@caixin.com) and Wang Liwei (liweiwang@caixin.com) and editor Lin Jinbing (jinbinglin@caixin.com)
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