Contrary to China Media, CCP’s Zero-COVID Policy Slowing the Global Economy

Health care workers in protective clothing conduct large-scale sampling of local residents for nucleic acid testing after a new Omicron surge in Beijing in April 2022. The CCP's COVID lockdowns and the Russia-Ukraine war have dragged down global economic growth and pushed inflation to new highs. (Kevin Frayer/Getty Images)

The Chinese Communist Party (CCP) media continues to hype the “Zero-COVID” policy claiming it brings greater certainty to China and favorably contributes to the world economy. However, this contradicts the findings of international research firms that say, in combination with the Russia-Ukraine war, the CCP’s COVID policy has slowed global economic growth and pushed inflation to new heights.

An article published on May 12 by Xinhua, the CCP mouthpiece, said China’s Zero-COVID policy “not only creates a healthier, safer, and more stable environment for China’s development, but it also benefits the world by bringing greater certainty to the economy.”

The article claims that by adhering to this policy, China’s economy unleashed “tremendous resilience and vitality” and the country has since become a hot spot for global investors.

The article said China’s economy exceeded expectations in 2021 and it was a record year for capital inflow. In addition, China’s foreign capital intake continued to grow by double digits into the first quarter of 2022. This favorable performance, insisted the article, was due to how the “dynamic zero-COVID ” policy had bolstered the confidence of long-term investors.

But contrary to these claims, the CCP’s zero-COVID policy has caused huge economic losses and investors are leaving China on an unprecedented scale. According to data released by the Institute of International Finance (IIF), China’s foreign capital outflow reached a record high of $17.5 billion in March. This includes $11.2 billion in bonds and the rest in stocks.

The Xinhua article even conflicts with official data from the CCP government, which confirms that, in recent months, foreign investors have retreated from China’s bond market in record levels.

The China Central Depository and Clearing Company also reports overseas investors sold a net $5.5 billion of Chinese government bonds in February. This was the largest single-month drop on record. The sell-off accelerated in March, reaching a new high of $8.1 billion.

Conflicts have also been identified in Xinhua’s reporting about the CCP’s Zero-COVID policy. Two days prior to the article’s publication, Tedros Adhanom Ghebreyesus, Director-General of the World Health Organization (WHO) released a statement that was rare for anyone with close ties to the CCP. He said considering the CCP’s new coronavirus and its expectations for the future, the WHO believes the Zero-COVID policy is unsustainable.

On the same day the WHO made its statement, Morgan Stanley, the international financial services firm, predicted global economic growth in 2022 would be less than half the growth in 2021. It said this drop would occur despite central banks tightening monetary policy to control record-high inflation caused by the war in Ukraine and the CCP’s strict attempts to control the COVID-19 surge.

Economists for Morgan Stanley have also reported the CCP’s tighter COVID-19 curbs led to factory shutdowns and crimped domestic demand, hitting the Chinese economy, and slowing export growth to its lowest level in two years.

A recent report by S&P Global, an international market research firm, claimed both China and Russia have dragged global growth to a 22-month low, pushing price inflation to record highs.

Chris Williamson, the chief economist with S&P Global Market Intelligence said in a May-6 report that in April, global economic growth slowed to its lowest level since the recession in the second quarter of 2020. He said this slow down  was caused by two continuing factors: Russia’s invasion of Ukraine and China’s COVID-19 lockdowns.

Russian economic activity collapsed two months in a row as war sanctions limited its business operations. Its manufacturing output and service sector activity also fell sharply again in April. Similar declines were observable in China due to the tightening of COVID-19 lockdowns in April.

In stark contrast to Xinhua’s claims about China’s favorable influence on the world economy, it can be said with certainty the opposite is closer to reality. Based on April data from reliable independent sources, the world is struggling with crippling supply chain problems and record price inflation due to the Russia-Ukraine war and China’s Zero COVID lockdown restrictions.