THE TIMES THEY ARE A CHANGIN’

Come gather 'round people, wherever you roam

And admit that the waters around you have grown

And accept it that soon you'll be drenched to the bone

If your time to you is worth saving

Then you better start swimmin' or you'll sink like a stone

For the times, they are a-changin'

?Bob Dylan

Last Wednesday, the Chinese government unveiled broad new policies regarding Covid management. The changes do not undo the overall policy of Covid zero, but they represent a significant loosening of measures that have severely impacted the economy by disrupting daily life and business for hundreds of millions of people, forcing many small businesses to close and youth unemployment reaching record highs.

There has been much speculation in western media about the rapid pivot in policy by the China government, with much focus on the impact recent demonstrations have had in China.

Although it's fair to say that the demonstrations were a wakeup call, the real impetus in the change was much more fundamental. The reality is that Covid zero was causing economic chaos. Continued lockdowns would only manifest more business destruction and ultimately cause social unrest which is the greatest fear of leadership.

The brunt of Covid zero cost has been born by provincial, city and local governments, with no budget for this and no financial support coming from the national government, many provinces really had no choice but to give up. Testing laboratories, medical suppliers, security companies, in many provinces were not being paid for months and beginning to refuse service to centralized governments.

China based global manufacturers were having their supply chains interrupted, preventing manufacturing of finished products. You cannot build a Tesla with 99% of the parts. You can't run a factory if you don't know your employees are going to show up on Monday morning.

We have to see how sensitive leadership in China becomes to the obvious failure of their flagship policy. Especially in light of the fact that vaccination programs are just being rolled out and China has yet to adopt global standard vaccinations instead opting for homegrown pharmaceutical production and Chinese traditional medical therapeutics.

Highlights from this week’s announcement:

TESTING:

The new rules move away from traditional PCR testing and digital QR codes to indicate possible exposure to the virus. Mass testing will no longer be conducted in areas that are not considered risky, a designation for regions that have previously had positive cases. High-risk categories are now limited to individual buildings, apartment units, floors, individual stores, rather than encompassing entire neighborhoods.

PCR tests and health codes will no longer be checked for travel between regions in China.

HOSPITALIZATION AND QUARANTINE:

The previous policy to lockdown and isolate patients in quarantine facilities and hospitals when they tested positive, even if they had mild symptoms, has been essentially abolished. If you test positive you are allowed to stay home and isolate. Close contacts are also allowed to quarantine at home and will be released with a negative test after five days.

LOCKDOWNS:

The power of local officials to impose lockdowns has been moderated to ensure that they are quickly lifted after testing. Local authorities may still lock down buildings in the event that a positive case is detected, but they cannot restrict movement and suspend business operations in regions outside of the high risk area. For high risk areas, the guidelines mandate lockdowns to be lifted if no new positive cases are detected in five consecutive days.

In lockdown areas, the authorities are strictly prevented from blocking fire escapes and public exits, which has been widely reported on Chinese social media as being a standard procedure in many communities. This is a possible concession to the recent protests. Blocked exits were widely discussed as a primary cause of excess deaths during the building fire in western China in the past month. The deaths of 10 people laid the groundwork for the mass unrest in over two dozen cities two weeks ago.

VACCINATIONS:

The government has reiterated is pledged to do more to increase the vaccination rates of older people. But the new rules don't answer the question about how officials will try to contain the inevitable wave of infections. The government has accelerated its vaccination campaign in recent days by approving several new Chinese made vaccines and publishing interviews with experts who try to allay fears of the health risks from getting a vaccination. Unfortunately many people are skeptical.

Sadly this effort may not really come in time. Even if China moves swiftly to boost its vulnerable populations, such as older adults, it needs months for the protection to kick in. China's domestic produced vaccinations are weaker than shots based on the newer mRNA technology and experts generally agree that a third shot is necessary to prevent serious illness.

In the meantime, non-medical interventions, including social distancing, quarantine and home isolation are not going to be enough to prevent large scale outbreaks. Preparedness is the key to overcoming significant impacts of major outbreaks.

This weekend, Shanghai is very quiet, the metro is not busy, the streets are largely empty, shopping mall have few people.?Once again, the government has spooked the population in its ineffective decision making and popular trust has reached unimaginably low levels. Long lines at hospital clinics and pharmacies are common with people trying to buy therapeutic medicines that are now in very short supply.

Maybe China will get lucky, and the degree of serious illness will be slow and overtime the medical system will be able to cope with the increase. However China still suffers from a lack of primary care facilities. Hospitals are the go to place for everything medical related, which means that they will be quickly overrun.?And luck is not a plan.

The line, it is drawn, the curse, it is cast

The slow one now will later be fast

As the present now will later be past

The order is rapidly fading

And the first one now will later be last

For the times, they are a-changin'

From Shanghai.

Alexander Glos