Fresh tests for economic growth in China

While it was inevitable, the arrival of the Omicron variant on China's shores and its spread domestically is a blow to the Asian giant as it seeks to stabilise a slowing economy. Omicron's high transmissibility will greatly test China's zero-Covid-19 approach which has hitherto kept its population of 1.4 billion largely Covid-19-free - apart from sporadic outbreaks that have been dealt with quickly through targeted lockdowns. It comes at an inconvenient time, adding uncertainty to an already torrid time for the economy. Indeed, after quickly recovering in 2020 through measures such as quarantines, lockdowns and closed borders to contain the virus, China lost growth momentum over much of last year, in part through its own policies.

While the zero-tolerance approach meant China was among the first off the blocks to recover from the economic doldrums the world was plunged into, continuing with the strategy has exacted an economic cost in the past year. Periodic lockdowns dampened consumption and caused supply chain disruptions as factories and ports closed temporarily. An energy crunch last year, partly a result of carbon emissions curbs to combat climate change, meant lost production. Beijing's efforts to de-leverage a highly indebted property sector also slowed down a sector that accounts for about a quarter of gross domestic product. It has not helped that the government chose last year to crack down on the tech, education and entertainment sectors, which battered stocks and led to huge layoffs. Then there is the ongoing trade and tech war with America.