China’s Covid lockdowns may cost at least RMB295 billion a month, or 3.1 percent of GDP in lost economic output, according to economist Michael Song Zheng of Chinese University of Hong Kong.
“However, the impact could double if more cities tighten restrictions,” he elaborated.
China rolled out its biggest COVID-19 lockdown on Monday since the start of the pandemic as Shanghai moved to confine millions of residents to their homes across the financial hub. This measures will mark China’s largest lockdown since Wuhan.
The estimate is derived on the assumption that cities generating about 20 percent of China’s GDP are currently imposing targeted lockdowns. According to Michael, that cost would double if those areas had to follow Shanghai and impose stricter policies requiring most residents to remain at home.
The projection came as Shanghai said it would roll out policies to help the local economy cope with a surge in COVID cases in the city, including offering refunds that will reduce firms’ tax burdens by RMB140 billion in 2022. The city government has voiced out in its official statement posted on its website, that internet platforms are encouraged to further lower service fees and telecom operators, to provide three months’ worth of free cloud services.
Whilst the hardest hit retail and catering industries will get subsidy support, and also in the form of regular Covid tests for their staff.
Subsidies will be given to front-line healthcare personnel and volunteers involved in the city’s fight against the pandemic.
