China plans for years of Covid zero strategy with tests on every corner

A network of tens of thousands of lab testing booths are being set up across the country’s largest and most economically vital cities.
Image: Bloomberg

After a bruising lockdown in Shanghai and severe curbs in Beijing were needed to halt the spread of Covid-19, China is doubling down on mass-testing in a move that’s dashing hopes for a shift away from its costly Covid Zero strategy.

A network of tens of thousands of lab testing booths are being set up across the country’s largest and most economically vital cities, with the goal of having residents always just a 15 minute walk away from a swabbing point. The infrastructure will allow cities like Beijing, Shanghai, tech hub Shenzhen and e-commerce heartland Hangzhou to require tests as often as every 48 hours, with negative results needed to get on the subway or even enter a store.

Researchers at China’s prestigious Tsinghua University designed robots to automate the swabbing process. Companies are dangling monthly salaries exceeding 10,000 yuan ($1,487) to recruit staff for the white, modular buildings that feature either sliding windows reminiscent of an amusement park entry point or two circular holes, chest-high, that allow workers to slip out gloved hands for swabbing purposes.

The investment underscores China’s commitment to Covid Zero, an approach that’s made it the only country in the world to contain the highly transmissible omicron variant that emerged last year. It required unrelenting effort, including business restrictions and personal sacrifices from millions of people. Other countries subsequently abandoned the policy that is becoming more entrenched in China, even as it upends the economy.

China’s divergence

The testing plan shows the extent of China’s divergence from the world where Covid infections, while potentially deadly, are now commonplace. The next iteration relies on taking faster action based on test results to prevent the virus from seeding within a community, as it did in Shanghai.

“It will only make Covid Zero last longer in China,” said Huang Yanzhong, a senior fellow for global health at the New York-based Council on Foreign Relations. “The immunity gap will remain, which makes living with the virus even more unlikely.”

The booths, solid though quickly made, will be ubiquitous in urban centers with at least 10 million residents, part of a seamless process designed to feed test results into popular smartphone apps such as Tencent Holdings Ltd.’s WeChat or Alipay, the payment app from Ant Group Co, in just a few hours. Some 420 million people live in cities and towns that have committed to routine Covid tests, according to data compiled by Soochow Securities Co.

The intent is to root out silent chains of transmission before the virus has a chance to spread widely in the community. But it will also make testing an inescapable part of everyday life for hundreds of millions of Chinese city dwellers.

A permanent PCR testing booth in Shanghai on May 31.

Michael Mina, a former Harvard University epidemiology professor who gained prominence for pushing testing as key to controlling the virus and reopening economies, says China’s approach will likely help find and eliminate outbreaks. The question is how long will it pursue the strategy, given that the virus isn’t ever going to go away.

“Absolutely it can help to detect omicron early, especially if everyone is having to test every two days,” said Mina, now chief science officer at eMed, a company that offers at-home Covid tests and telemedicine services. “However, it is an exceedingly difficult approach.”

The booths will offer the gold standard PCR laboratory tests, which look for the virus itself and take time to process. They are considered more sensitive and reliable than the rapid at-home antigen tests now prevalent in other parts of the world that provide results in minutes.

Permanent zero 

The building of a permanent testing infrastructure heightens concern that senior leaders are postponing, if not completely ruling out, a transition away from the Covid approach that is leaving the world’s second-largest economy increasingly isolated as others dismantle pandemic restrictions.

China’s top health official, Ma Xiaowei, urged authorities in provincial capitals and large cities in mid-May to set up regular testing sites to detect the spread of omicron. The country will also establish “permanent” Covid hospitals, Ma said in an article published in the Communist Party’s Qiushi magazine.

The cost of the effort alone, estimated at 200 billion yuan ($30.1 billion), is about equal to the gross domestic product of Estonia, according to calculations from economists at Goldman Sachs. That’s only 0.2% of China’s 2021 output, but could rise to 1.8% if smaller cities follow suit and 70% of the population is tested every 48 hours, Nomura analysts estimate.

The hope is that China will recoup the money by discovering infections earlier and avoiding economically devastating lockdowns like the one Shanghai is now inching out of. Analysts at Soochow Securities said the current restrictions could knock 1.1 percentage points off China’s domestic growth for the year. Routine testing could cut the financial impact in half by averting the need for some lockdowns.

“The intention is to avoid lockdown of the whole city when a few cases are identified, so in that sense it may help to balance economic growth and containing outbreaks,”said Zhiwei Zhang, chief economist at Pinpoint Asset Management.

He, too, is hoping that it’s not a permanent addition to China’s way of life.

“Hopefully this is a temporary policy measure,” he said. “China has to find a way to exit, otherwise the economic costs will be too high for the government as well as for households and firms.”

It’s unclear if smaller cities will be able to afford the costs of ubiquitous testing without central government help. After initial speculation that China’s 3.6 trillion yuan state medical insurance fund would cover most of the expense, the National Healthcare Security Administration recently said local governments must pay for it.

Until now, Shenzhen billed 90% of its Covid tests to the national health insurance, local media have reported. Some cities cut costs by expanded testing intervals to three days, from two, after the change.

One city in western Sichuan province, called Langzhong, asked people to test once a week at their own expense. The local government later issued another statement saying the regular testing will be done on demand, after the self-pay rule was widely reported by local media.

Vested interests

For officials, frequent testing can be a win-win situation. They get credit for keeping a city virus-free or for detecting cases, wrote Lu Ting, chief China economist at Nomura, in a recent research note.

A testing booth in Beijing on May 30.

Chinese companies like Wuhan Easydiagnosis Biomedicine Co. and Dian Diagnostics Group Co. saw earnings surge amid demand for tests globally, especially early on. As other countries accept the virus as endemic, these companies will become more reliant on their home market.

“If they do this in the long run, it will create interest groups and solidify them,” said Huang from the Council on Foreign Relations. “They will then spare no effort to lobby Beijing to stay in Covid Zero. They will become an ally with senior government elites who looks to Covid Zero to achieve effective and comprehensive control over society.”

It may also hurt the country’s efforts to get through the Covid pandemic with the least possible damage, said Mina, the American testing advocate. Because the virus isn’t circulating in China to provide natural immunity, people there may be uniquely vulnerable, especially to new variants.

“I’m very, very worried about China,” he said. “This policy puts China in a really dangerous position. It’s essentially dry kindling, ready to ignite anytime there’s cases.”

© 2022 Bloomberg

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