Image: Reuters Berita 24 English - China's 'zero-COVID' policy of continually monitoring, testing, and isolating its inhabitan...
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| Image: Reuters |
China's 'zero-COVID' policy of continually monitoring, testing, and isolating its inhabitants to avoid the spread of the coronavirus has wreaked havoc on most of the country's economy, but it has spawned development bubbles in the medical, technological, and construction industries.
According to analysts, the Chinese government, which is the only major country to pledge to eradicate the coronavirus within its borders, is on track to spend more than $52 billion (350 billion yuan) this year on testing, new medical facilities, monitoring equipment, and other anti-COVID measures, benefiting as many as 3,000 companies.
"Because of the government's focus on a containment-based approach in fighting COVID, companies that provide testing services and other related industries are making a lot of money in China," said Yanzhong Huang, a global health specialist at the Council on Foreign Relations (CFR), a U.S. think tank.
China wants COVID testing centers within 15 minutes of everyone in its major cities, and it continues to mandate mass testing at the first hint of an outbreak. According to Pacific Securities in Hong Kong, this has generated a market for test producers and providers worth more than $15 billion every year.
The vast bulk of this is paid for by the government, either through the purchase of test kits or the payment of corporations to conduct testing. Although test prices have plummeted since the coronavirus outbreak in early 2020 – to as low as 50 cents per test – the continued demand has aided a number of businesses.
Hangzhou-based Dian Diagnostics Group Co Ltd, one of China's largest medical test manufacturers, had its first-quarter profit more than double. Its revenue increased by more than 60% to $690 million, with just under half of that coming from COVID testing services, which were nearly exclusively paid for by the government.
Rival Adicon Holdings Ltd has filed for an initial public offering on the Hong Kong stock exchange, claiming to have acquired roughly $300 million in largely government funding for its COVID testing in 2020 and 2021, according to the company's financial documents.
According to an article in the state-run Securities Times, Shanghai Runda Medical Technology Co Ltd processed up to 400,000 COVID tests per day in April, making more than $30 million per month during Shanghai's nearly two-month-long lockdown
China defends its 'zero-COVID' policy as critical to preserving lives and preventing the overcrowding of its healthcare system. Even as the economic toll rises, it shows no signs of slowing down.
According to the most recent data, the country's economy has been weakening dramatically since March, as strict lockdown measures congested highways and ports, stranded workers, and shut companies, affecting jobs, consumer spending, exports, and home sales.
Many private-sector experts forecast the GDP to contract in the April-June quarter from a year ago, compared to 4.8 percent expansion in the first quarter. This year, the blue-chip CSI 300 Index is down 19%.
Investors are unsure how long the boom will persist for companies like Dian, Adicon, and Shanghai Runda, which are heavily reliant on government expenditure. Dian's revenue is expected to decline slightly next year, according to analysts, while Shanghai Runda's is expected to expand. Both companies' stock prices have dropped since the beginning of the year.
According to a recent research note from Shenzhen-based Essence Securities, "the evolution of the pandemic is unpredictable due to the enormous number of altered strains of the novel coronavirus and the intricacy of infectiousness." "If the epidemic is well controlled and the epidemic prevention policy is altered, the market demand for COVID nucleic acid testing may be negatively impacted."
According to Huang of the CFR, China's vast program of lockdowns, tracing, and isolation could avert a worst-case scenario, but it was not a long-term answer. "It's unsustainable epidemiologically and economically," he said.
Requests for comment from Dian Diagnostics, Adicon, and Shanghai Runda were not returned. Beijing and Shanghai health authorities did not reply to calls for comment.
SURVEILLANCE IN MASS, QUICK BUILDINGS
The Chinese government's desire for gadgets that may help it keep track of the COVID status of its 1.4 billion residents has benefited dozens of surveillance and thermal imaging camera makers, including Wuhan Guide Infrared Co Ltd and Hangzhou Hikvision Digital Technology Co Ltd.
In 2020, Wuhan Guide, one of the world's biggest makers of thermal imaging equipment, more than doubled its sales as it worked hard to provide fever-detecting cameras across China and beyond. Last year, growth slowed, but economists expect it to increase up this year and next. A request for comment from the corporation was not returned.
The mother of invention has always been disease. According to a Reuters assessment of international and domestic databases, Chinese enterprises and research institutes have submitted at least 50 COVID-related patents since March. The majority of the inventions revolve around modifying existing surveillance cameras and platforms to detect close encounters and identify potential positive cases.
The pressing need for hundreds of additional hospitals to relieve pressure on China's already overburdened medical infrastructure has sparked a development boom.
China Railway Group Ltd, a Beijing-based conglomerate with interests in construction, manufacturing, and real estate, has constructed makeshift hospitals across China this year, with a focus on locations impacted hard by COVID, such as Shanghai and Changchun in the northeast. Its earnings has been continuously increasing for the past two years, aided in part by COVID-related initiatives, and analysts expect this trend to continue in the coming years. In May, the company's shares reached a three-year high. A request for comment from China Railway Group was not returned.
As diseases rose, nearly 300 tent hospitals were established around China in a 35-day period between March and April, at a cost of more than $4 billion, according to one expert.
Shanghai and its environs accounted for one-third of them. The government's insistence shows no signs of fading. In a key Chinese Communist Party journal, Qiushi, on May 15, China's National Health Commission chief Ma Xiaowei urged for the construction of "permanent makeshift hospitals," implying that such structures will be needed in the long run.
According to a Reuters analysis of tenders for such projects, the government would spend around $15 billion on new hospitals this year.
