No End In Sight For China’s ‘Dynamic Zero’ COVID Policy

What happened For three consecutive days since October 10, People’s Daily, the most authoritative Chinese state media, published three op-eds that reaffirm the correctness of China’s current “Dynamic Zero” 动态清零 COVID-19 control policy. The op-eds are all under the alias Zhong Yin 仲音, widely believed to reflect the policy direction of the Chinese Communist Party (CCP). The three pieces respectively call for more “faith and patience” in “Dynamic Zero,” stating that the policy is sustainable and must be upheld, and disparaging complacency or “lying flat” 躺平 in the face of the virus. The core rationale throughout these articles points out the virus's increased contagiousness and the upcoming flu season as posing a huge threat to China’s 267 million over 60 years old population and other vulnerable groups. While the approach will be continuously tailored to protect economic growth, “lying flat,” referring to the practice of co-existing with the virus, would be an admission of inability to successfully confront the epidemic and therefore must not be adopted in China. The Jing Take The importance of these op-eds is in their timing. Published on the eve of the pivotal 20th CCP National Congress, the three pieces signal that chances are minuscule for an immediate relaxation of the current COVID-19 policy post congress. For a while, there were speculations that the congress might provide a turning point, after which the country would relax its zero-COVID stance. The op-eds dispel this notion. It is unlikely that there will be a dramatic rollback of the current regulations so soon after People’s Daily has gone to great lengths to defend them. For luxury brands, the op-eds serve as yet another reason to abandon expectations, if any, that China's retail might return to pre-pandemic levels soon after congress. Mobility and border restrictions, as well as frequent COVID tests, will remain in place for the foreseeable future and most certainly for the remainder of 2022. Even if Beijing were to loosen its policy, the changes will be gradual and spread out over time. This means that the vast majority of Chinese consumers will continue to shop for luxury items domestically and remain cautious about long-distance trips. For reference, during the recent weeklong National Day October holiday, there were 422 million trips — down 18.2 percent year-on-year and constituting 60.7 percent of trips made during 2019's October holiday. Tourism revenue fell 26.2 percent year-on-year to 40.4 billion (287.2 billion RMB), reaching just 44.2 percent of the 2019 level. As such, brands should be refining existing retail strategies to adapt to emerging changes in China’s “Dynamic Zero” approach, instead of banking on a return to pre-pandemic normalcy in the near future. The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.

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No End In Sight For China’s ‘Dynamic Zero’ COVID Policy