Following a deadly fire at a residential building in China’s Xinjiang region, which many blame on Covid-19 lockdowns, Chinese protesters have taken to the streets to demand an end to strict pandemic restrictions.
Even before the protests broke out, there were signs that President Xi Jinping’s administration was preparing to reverse the costly zero-Covid policy, though the exact timetable remains uncertain. But this process will be more complicated than many seem to realize.
China’s zero-Covid exit clearly carries public health risks that need to be managed, especially given low vaccination rates among the elderly. However, the operational challenges posed by this process are less noticeable.
As China has learned from Hong Kong’s painful experience, a wave of infections in a densely populated area can create a surge in demand for medical resources, crippling the public health system. If the government can’t find a way to meet that demand quickly, the number of deaths, especially among the elderly, could skyrocket.
The need to prevent such a demand shock explains why countries have largely taken a gradual approach to lifting pandemic control measures. But for a country with strong centralized control, China has the advantage of organizing its gradual reopening not only in a temporal sense, but also in a geographical one.
China’s economic reform and opening up over the past four decades offer useful lessons. Instead of opening up the entire economy to the outside world at once, China began by designating four mainland cities as special economic zones. Soon after, it opened another 14 coastal cities. Then it gradually replicated the model now tested in the rest of the country.
From an operational standpoint, this incremental approach offered several obvious advantages. The central government was able to contain, and therefore manage, the risks associated with market reform. In addition, he was able to experiment, accumulate experience, and collect data, which increased people’s confidence and guided the expansion of reforms. And it was able to mobilize talent from all over the country to support relevant initiatives.
Emerging from zero-Covid, China may take a similar approach, creating “special health zones” in well-resourced, high-risk cities such as Guangzhou, which recently saw a surge in cases. Such zones will enjoy looser pandemic restrictions, but will face limits on movement to other cities and regions.
The Chinese government may collect data on the impact of easing pandemic restrictions within these contained zones before easing restrictions more broadly. If a health care crisis were to arise in one of these zones, it would be contained, making the surge in demand for critical medical supplies and personnel much easier to meet, especially by ensuring that the areas’ resources still adhere to zero covid policy. could be reassigned.
China has experience with this type of resource sharing: During Shanghai’s lockdown earlier this year, more than 38,000 medical staff from 15 Chinese provinces traveled to the city to help address rising cases. But, in the midst of a zero-Covid exit, the pooling of resources would need to be organized on a much larger scale, with more careful advance planning.
Intuitively, resources should be pooled at the subnational level, with unmet demand in one region being met by excess supply from neighboring regions. In this way, the resources would have to be transported over relatively shorter distances, making transportation faster and cheaper.
But this approach also has a notable limitation: Since neighboring regions tend to have strong economic ties, it makes sense that those near special health zones would be next in line to relax their pandemic restrictions. Once that happens, an increase in covid-19 cases and demand for medical resources in neighboring regions can be expected. If your medical resources have already been sent to the special zones, you will quickly face a shortage of medical supplies and personnel.
Given this, the pooling of regional resources must be complemented by a system at the national level. That way, resources can be transferred between distant regions, which are more likely to be at different stages of reopening.
This larger-scale effort would require prior preparation and coordination between the central government and subnational governments at all levels. Local governments must identify “disposable” medical resources that, if contributed to the “pool” of resources, would not cause a significant decrease in the quality of local services. The central government, for its part, must devise standard operating procedures to ensure that resource pools from different regions cooperate smoothly.
Meanwhile, the central government could create one or more centralized distribution centers to hold medical resources for shipment to regional centers. It could also assemble a team of specialized medical workers to be sent to special health zones on request. Fortunately, China’s highly centralized political system is well prepared for such large-scale and complex efforts.
Despite the rise in popular unrest, China’s exit from zero-Covid will not happen overnight. Instead, it is likely to take place in a gradual and controlled manner, just like China’s economic reform and opening up. That said, China’s leaders must move much faster than they did four decades ago. With a carefully designed operating strategy, there’s a good chance they can pull it off. —© Union Project
S Alex Yang is Associate Professor of Management Sciences and Operations at London Business School. Angela Huyue Zhang is a professor of law at the University of Hong Kong and author of Chinese Antitrust Exceptionalism: How China’s Rise Challenges Global Regulation (Oxford University Press, 2021).
