China | COVID | Emerging Markets | UK
Charts of the Week: The Covid Conundrum
- By Matthew Tibble
- 2 min read
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Summary
- Covid cases are surging in China.
- Deaths could surge too if policy loosens.
- A different kind of sickness plagues the UK economy.
China’s Covid Redux
The end of China’s zero-Covid policy will now be exclusively a medical question following the Party Congress. Politics and economics will be irrelevant in the debate. Logic suggests the earliest point of a broad relaxation of the zero-Covid policy could happen in spring. This is the market consensus. But our conviction around that forecast is extremely low. Re-opening could come sooner, and, more worryingly, it could also come later. Meanwhile, cases are surging (Chart 1).
Could Taiwan’s Covid Conundrum Be Troubling China?
Since the outbreak of COVID in 2020, Taiwan pursued a zero-Covid policy much like China. But in April 2022, it switched to a new policy of mitigation. This has seen a surge in COVID-related deaths: from 850 at the end of March 2022 to 12,385 today. This works out to be 53 deaths per 100,000 population (Chart 1).
Could something similar happen in China? Currently, China has reported a total of 5,226 COVID deaths since 2020. If China was to re-open and end up with a similar COVID death rate as Taiwan, the death count would jump to 745,000.
A Different Kind of Sickness Plagues the UK Economy
Since before the pandemic, the number of employed people is slightly down. The total working-age population is roughly flat. The greatest change has been the rise in the number of inactive people due to sickness, which is now at a record high (Chart 3). This phenomenon predates COVID – it began in early 2019 (Chart 4). Almost 2.5mn people are now inactive because of long-term health problems. And it is weighing on the economy.