China’s two-front fight to quash the virus and revive its economy

THE FORTUNES of the world’s second-biggest economy hinge on two kinds of hesitancy. The first is over vaccines. China’s elderly are surprisingly reluctant to get inoculated against covid-19. That has saddled the country with a vulnerable population that could die in large numbers if the government abandons its controversial “zero-covid” policy. But this uncompromising stance, which tries to stamp out any outbreak of the virus, obliges China to impose ruinous lockdowns on some of its most productive cities, including Shanghai, where some residents have been confined to their homes for over 30 days.

These limits on movement are wreaking economic havoc. Even before the worst restrictions were imposed, retail sales shrank by 3.5% year-on-year in March (in nominal terms), according to figures released on April 18th. Catering services fell by more than 16%. Unemployment in China’s 31 biggest cities is now 6%, higher than in 2020, points out Zhang Zhiwei of Pinpoint Asset Management. Overall GDP grew surprisingly fast, by 4.8% in the first quarter, compared with a year earlier. But that was mostly because of strength in the first two months of the year.