Are China's Zero COVID Plans Helping Or Hurting? IMF Warns It May Be A 'Burden' Globally

China may be inflicting more harm to itself than necessary in its quest to keep COVID-19 under wraps, the head of the International Monetary Fund (IMF) warned on Friday.

Speaking virtually at the gathering of world leaders at Davos, Switzerland, IMF director Kristalina Georgieva said that China's "zero-COVID" policy is beginning to present more risks than benefits to the world's second-largest economy. This, she adds, produced benefits at the start of the pandemic, but it now promises complications for the global economy at a time when supply chains are already being crimped by the pandemic.

“The zero-COVID policy, for quite some time, did contain infections in China,” said Georgieva. “The restrictions that need to be imposed are more of a burden to the economy, putting more at risk not [for] only China, but also China as a supply source for the rest of the world."

Zero-COVID is a policy pursued by Beijing that is aimed at the complete elimination of the virus through strict public health measures like lockdowns, mass testing and limiting the entry of foreigners into China. These methods to a degree mirror earlier containment strategies used in Wuhan in December 2019 when the virus first emerged in the city before spreading worldwide.

The Chinese authorities have maintained the public’s trust for its intense crackdown on COVID-19, but even these draconian measures have not prevented entire cities from being forced to shut down. By shutting down entire areas or imposing strict limits on movement, China has directly created problems that have ripple effects abroad, especially in areas where manufacturing activity is strong.

Last fall, closures at Chinese ports after detecting cases of COVID-19 created serious delays at ports in the U.S. and Europe. More recently, the shutdown in the city of Xi’an after cases of Omicron emerged there led to major semiconductor manufacturers curtailing their operations. This comes at a time when economies worldwide are struggling amid a shortage of chips for any number of industries.

China may be hoping to keep cases of COVID-19 down as it prepares for the start of the Winter Olympics in Beijing in February. It is estimated that close to 20 million Chinese citizens are being isolated before the Games begin in a country with a population that tops 1 billion people.