Covid-19 testing could cost China 1.7 trillion yuan – Dan Tri

Covid-19 tests could cost China 1.7 trillion yuan - June 1

Locals wait for a Covid-19 test in the city of Dalian, Liaoning province, where the government has announced mass testing will be carried out weekly starting May 5 (Photo: Getty)

The government of the northeastern region of Dalian city in Liaoning province announced on May 3 that it would start organizing large-scale weekly tests from May 5.

The city of Zhengzhou in Henan province also said on the same day that it would conduct three series of mass tests in downtown areas by May 6.

These are just two of a growing list of local cities that have been pushing for more frequent testing as China faces new outbreaks of the virus following similar measures in the capital Beijing and in China such as tech hub Shenzhen and the US eastern city of Hangzhou.

According to Tao Chuan, a macro analyst at Soochow Securities and Financial Consulting in Beijing, regular mass testing after the holiday could be extended across the country. 5 days ended on May 4th to contain the disease.

If all the first and second-tier cities in China, with a population of about 505 million, conducted mass testing in one year, the cost could reach 1.7 trillion yuan ($257 billion), or 1.5% of GDP, or 8.7% of GDP GDP has reached the country’s public finance revenue over the past year, Tao said.

And he warned that the extra costs would put additional pressure on local governments and city regulators, already burdened with implementing tax cuts and increased infrastructure spending to boost China’s slowing economy.

Beijing is insisting on its “No Covid” policy as it battles the worst wave of the epidemic since Wuhan broke out in 2020.

However, economists warn that strict disease prevention measures are hampering China’s ambitious GDP growth target of around 5.5% by 2022.

Also on May 3, rating agency Fitch Ratings forecast that China’s economic growth estimate for 2022 will fall to 4.3% from 4.8%, with the country predicting that the country will flexibly comply with the “No Covid” policy until 2023.

Still “cheaper” than mass blockade

At a recent meeting, the Chinese government pledged to stick to the “No Covid” policy.

But the country’s leadership also stressed that containment efforts must be “adapted to the new transmission characteristics of the virus” to help minimize the impact of outbreaks on economic and social development.

While that’s not the best solution for China, regular mass testing is still a cheaper option than strict lockdowns, Tao said.

Tao estimates monthly losses could reach 156.8 billion yuan if the country’s biggest cities like Shanghai were shut down for two weeks.

That figure is compared to the expert’s estimated monthly cost of 143.6 billion yuan, or a total of 1.7 trillion yuan over 12 months, for regular mass testing. Meanwhile, citywide shutdowns also require large-scale testing, so the economic damage will be greater.

Analysts at Founder Securities also said testing under China’s flexible “No Covid-19” policy has exploded, particularly this year. “Testing has become a daily need for people when they go out,” Founder Securities said.

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