Covid-19: China lockdowns costing $46 billion a month, say experts

China’s Covid lockdowns are likely costing the country at least $46 billion a month, or 3.1 per cent of GDP, in lost economic output, and the impact could double if more cities tighten restrictions.

That’s a minimum estimate from Zheng Michael Song, an economist at the Chinese University of Hong Kong based on the assumption that cities generating about 20 per cent of China’s gross domestic product are currently imposing targeted lockdowns. That cost would double if those areas had to follow Shanghai and impose stricter policies requiring most residents to remain at home. The 3.1 per cent estimate — equivalent to 295 billion yuan ($46.3 billion) — is “conservative,” he added, as it doesn’t include the effect on incomes through inflation.

Song and his team use data on the location of nearly 2 million trucks which crisscross China, and whose movements are highly correlated with local economic activity.  A strict lockdown in Shanghai alone could reduce China’s real GDP by 4 per cent, Song and his co-authors estimate. If China’s four largest cities all underwent a strict lockdown together, national inflation-adjusted GDP would fall 12 per cent for the duration of the shutdowns.

 A worst case scenario would be a lockdown of all cities for one month, which would cut national GDP by 53 per cent over that period.

Bankers who remain in HK get pay bonanza
 
Hong Kong’s stringent Covid restrictions turned the city into a dead end for the legions of finance workers decamping for other destinations. Those who choose to stay are being heavily rewarded.  Typically, finance workers in Hong Kong would get roughly a 15 per cent “walking across the street money” pay hike to make up for the risk of moving to a new employer, said Christine Houston, managing director of executive search firm ESGI said. Now, it’s “certainly no less than 20 per cent to
30 per cent.”