Mark Tanner
27 July 2022 0 Comments

There is one China-related question that is asked more than any other at present: “When will the Dynamic Covid Zero measures end?” The next biggie is: “When will China’s borders open up?” Both are obviously closely connected.

The uncertainty around Covid Zero has shaken consumers’ confidence and altered their behaviour. An understandable change is that many people have stocked up on long life food & beverage just in case there are future lock downs. Whilst Consumers’ lives have been disrupted by frequent, mandated covid testing; local governments have been hammered by having to fund them. An estimate in June put the annual cost of testing every two days across China’s biggest 49 cities as high as $252 billion – higher than New Zealand’s GDP last year! But the Government crackdown has seen the cost of a single Covid test fall from ¥100 ($14.80) to just ¥10 ($1.48) over the past few months, as the days of big profits for testing companies look to be over.

Despite the direct costs of implementing Dynamic Covid Zero falling, Chinese consumers are becoming less tolerant about the uncertainty and upheavals. 10,000 wealthy Chinese looking to pull out $48 billion of assets to migrate offshore is but one indicator of this. As the rest of the world is largely getting on with the bumpy ride of living with the virus, more Chinese are questioning when and how the current policies will end.

The first promising sign of easing Covid controls was last month’s reduction of time arrivals spend in centralised quarantine facilities from 14 days to seven, with an additional three days at home. The fact that the seven day requirement has not changed even with more infectious strains of Covid entering China is positive. After autumn’s Communist Party’s 20th Party Congress, we should see further decisions around the future of Covid measures.

In what could be a taste of things to come, China announced last week that the 19th Asian Games will be held in Hangzhou from 23 September to 8 October 2023. The games were originally planned to take place in September this year, but were postponed due to the pandemic. This is the strongest signal yet that China may finally have its borders open next year.

Beijing may have hosted the Winter Olympics this year under “closed loops”, but the Olympics had much more status and face at stake. Whereas the Olympics weren’t shifted, the lower-profile Asia Games, originally scheduled for September this year, were postponed in May with no new date given.

A little over a week after postponing the 2022 Asia Games, China withdrew from hosting the 2023 football Asian Cup in June and July due to Covid. The 24-nation tournament was to be played in mostly newly-built stadiums which had already seen substantial investment. The withdrawal was a worrying sign that China may not even be opening its borders by mid-2023.

But it is a promising sign that Hangzhou will be welcoming over 11,000 athletes – more than the Summer Olympics – in autumn 2023, having locked down a date, and not cancelled the event like the football cup. While it’s not a sure thing, it’s a positive sign that things may finally be returning to normal again some time next year.

As we’ve noted before, opening China’s borders will help reconnect foreign brands with their Chinese staff, partners and customers. It will bring more students and tourists, opening minds and raising awareness about overseas products, lifestyles and subcultures, presenting more opportunities for foreign brands.

In the meantime, China Skinny can be your ears and eyes on the ground in China while borders remain closed. We can ensure that you remain relevant and profitable in the market, and are in a good position when the borders to open up again. Contact China Skinny to learn more about how we can assist.

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