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The Missing Factor In Explanations Of China’s Economic Distress: Covid (Part 1: The Cover-Up)


  • “[China’s Prime Minister] Li Qiang praised authorities for ‘a smooth transition’ from the strict rules of China’s ‘zero-Covid’ regime.” – The Economist (March 9, 2024)
  • “China’s economy is showing multiple signs of weakness. Actual growth seems below the official figures; there is substantial deflation; the housing market has yet to stabilize; and the domestic stock markets have fallen significantly. Domestic confidence is flagging, and foreign investment in 2023 was at a three-decade low.” – Center for Strategic and International Studies (2024)

‘…Actual growth seems below the official figures…’

Indeed. Estimates of China’s economic performance in the past two years diverge.

According to Beijing, the Chinese economy grew about 5% annually in 2022 and 2023, measured in local currency.

The International Monetary Fund (IMF) adjusts for the fact that the renminbi lost 12-14% of its value over that period, and comes up with a different picture. Real GDP actually declined from 2021 to 2023. (Other Western sources, including the World Bank and the Federal Reserve cite similar numbers.)

The Chinese growth engine seems to have stalled. What happened?

Western economists tend to focus on the usual economic drivers, the indicators and trends that regularly factor into their models – trade figures (mixed signals), debt loads (high), price trends (deflationary), consumer demand (weak), consumer savings (excessive), industrial capacity (overbuilt), fiscal stimulus (inadequate), monetary policy (incoherent). Some see a parallel to the long period of economic stagnation that Japan experienced following its economic crisis in the late 1980s. References to the “Japanification” of China have begun to proliferate.

All that may be true. But – there is another factor driving the Chinese downturn, which is not part of the Japanification scenario. It is missing from most economists’ explanations because lies outside the parameters of economic science as such.

The Chinese economy is suffering from the continuing impact of Covid-19.

Chinese public health policies were severe. For almost three years following the outbreak of the pandemic, China pursued a “zero-Covid” policy aimed at “maximum suppression” – which meant aggressive contact tracing, frequent mass testing, border shutdowns, large-scale internal quarantine programs, and ultimately lockdowns of entire cities. Factories and businesses struggled to maintain operations. Consumption patterns were disrupted as consumers were restricted from many of their normal activities. Supply chains serving Western customers broke down. The economic damage was significant, as this assessment published in October 2022 summarized:

  • “In September alone, a month of only minor outbreaks, Xi’s Covid lockdowns imprisoned 313 million people indoors. Zero Covid has crushed consumption, bankrupting thousands of small businesses and dragging down growth this year to the lowest figure in four decades.”

Then — in December 2022 – China abruptly ended zero-Covid.

A relief consensus took hold; China’s economy would surely now experience a robust rebound. Chinese leaders were optimistic, and many Western observers agreed. Goldman Sachs saw the glow of a new dawn in the East.

  • “We expect China GDP growth to accelerate to 4.5% next year on the back of China’s potential exit from its zero-Covid policy.” (Nov 2022)

Goldman’s report was titled “After Winter Comes Spring.”

  • “We expect China’s reopening experience to bear resemblance to most other countries’ reopening experiences, with growth accelerating, especially for household consumption and services industries, inflation picking up,

For investors, there would be upside…

  • “We expect higher equity prices, modestly higher rates, higher commodity demand (especially energy), and a stronger RMB vs USD next year.”

And even hope for the real estate industry there:

  • “We expect property-related activity growth to improve.”

These forecasts proved to be wrong in every possible way. The renminbi plummeted. Consumption languished. A deflationary trend developed. The property market transitioned from dismal to disastrous. The Chinese stock market continued its multi-year slide.

The failure of the post-Covid recovery is puzzling, and is made more so by the lack of sound information about the true impact of Covid in China – both before and after the change in the Zero policy.

What is becoming clear is that the scope of Covid’s impact on the Chinese economy has been much more severe than the official data describe. At first reflexively, then as a matter of proactive design, the Chinese government set out to conceal the reality of the pandemic from its own citizens and from the outside world. The motive (I think) was an instinctive need to defend the Communist Party’s reputation for competency, upon which its practical legitimacy is based. In the end, they deceived themselves as well.

In this column, I will examine the discrepancies and gaps in the data from China related to the impact of the pandemic, to show why the official narrative cannot be trusted. In the second installment, I will review the ways in which these gaps can be filled in by other means to get a better sense of the scale of the medical, social and economic disaster that is still unfolding, which underlies the negative economic scenario described above.

The Missing Covid Data

COVID-19 caused the worst global public health emergency in 100 years. As of mid-2023, almost 700 million people had been infected worldwide. The World Health Organization (WHO) estimates that 7 million have died. Other authoritative estimates suggest the number of COVID deaths could exceed 30 million.

COVID-19 also provoked a severe “data emergency” that has impeded efforts to respond to the public health crisis and has undoubtedly cost many lives.

Data is key in any crisis response: timely, accurate, accessible data, freely shared and updated. As the COVID virus spread rapidly across the globe in early 2020, the need for accurate information about the origin, nature, and trajectory of the disease became urgent. Medical professionals and public health authorities, initially working in the dark as to the nature of the disease agent, desperately sought crucial data to understand and model its transmissibility, virulence, and mutation rates, as well as how to diagnose, treat, and prevent the illness. Governments urgently needed guidance on how to manage the economic, social, and political impact of the pandemic.

The epidemiological data was compromised from the beginning. Medical scientists and public health authorities around the world ran up against gaps and deficits in the availability, completeness, and integrity of COVID information.

Some of these problems were the natural consequence of the confusion created by an unforeseen and fast-moving crisis. The first months of the pandemic everywhere were characterized by severe uncertainty and frantic improvisation. Some of the most important early data was never properly collected or retained.

But the worst data deficiencies arose from active policies of information suppression in China, where the disease originated. Some of the most critical data was withheld, or intentionally altered, even destroyed. These policies have continued to this day.

It is becoming clear that the COVID impact on China was and is much worse than portrayed in official statistics. In December 2022, after years of maintaining a storyline of “miraculous” success in containing the virus (often cited by Beijing as evidence of the superiority of the Chinese political system), the country abruptly abandoned its “zero-COVID” policy. This suddenly exposed an “immunologically unprepared” population of 1.4 billion people to the ravages of the highly contagious Omicron variant.

At the same time, the suppression of key data intensified. China eliminated mass testing and simply stopped reporting some of the most important statistics. Shortly after China’s abandonment of zero-COVID in December 2022, The New York Times, in an article titled “As Cases Explode, China’s Low COVID Death Toll Convinces No One,” wrote:

  • “China’s murky statistics are fueling widespread public distrust. Its narrow definition of COVID deaths ‘will very much underestimate the true death toll,’ the W.H.O. says.”

It is worse today. Even the most basic data is now unavailable. As Nature magazine reported in June 2023, “China no longer publishes its COVID-19 case count.” Hundreds of millions of Chinese have sickened, and likely millions have died, overwhelming the Chinese healthcare system and wreaking social and economic havoc. The crisis has damaged China’s economy and accelerated the diversifications by many Western companies away from reliance on Chinese supply chains, a trend that will impact the global economic landscape for decades to come.

Gaps in the Epidemiological Data

China has been the source of many of the major infectious diseases that have emerged in the last century. The country is thus often on the medical front line of new outbreaks, where critical early data related to a new disease first becomes available. Understanding the epidemiological patterns that develop in China, which first reveal the symptomatic expression, transmissibility, and the virulence of a new infectious agent, is vitally important for public health authorities in other countries.

Unfortunately, the initial instinct of local Chinese officials is often to cover up problems or hide data that do not fit the official storyline. China has a history of public health scandals involving faulty vaccines (multiple incidents); and coverups and mismanagement related to the initial outbreaks of SARS (2003); bird flu (2004) and (2013); and swine flu (2019).

It is not surprising that the COVID crisis in China has unfolded behind a curtain of secrecy, active falsification, and even destruction of data. Researchers and medical personnel have been put under gag orders. Truth-tellers in the first weeks of the outbreak were persecuted for “spreading rumors” (famously, and tragically, in the case of Dr. Li Wenliang). Scientific labs in China refused to cooperate with international requests for COVID data. Official reporting on COVID mortality was shut down after April 2020. Even today, Beijing continues to publish COVID statistics that no one believes, and which are dismissed by most of the media, international authorities, and even (according to leaks) by some Chinese officials themselves.

Nevertheless, Chinese government statistics can be examined to reveal something of the true scope of the problem, or at least to show how far the official picture differs from reality. There are at least three ways of assessing the plausibility of the official numbers:

  1. Analyzing the raw COVID mortality statistics: How many deaths from COVID were reported? Are the numbers believable?
  2. Comparing China’s reported infection and mortality rates with the rates reported for other similar countries: Does China fit the pattern seen elsewhere?
  3. Analyzing the reported case-fatality rate: Of those who became infected how many later died?

1. Raw COVID Mortality Figures.

The COVID-19 outbreak occurred in China in late 2019 and early 2020 in the Hubei province and its capital, Wuhan. In addition to silencing medical “whistleblowers,” Chinese authorities delayed sharing data showing that human-to-human transmission of the virus was occurring. Nevertheless, after some initial confusion, the data collection process seems to have functioned quasi-normally, without obvious manipulation, for the next few months. China’s infection and mortality figures for the first quarter of 2020 seem plausible today, which is to say they are in line with the early experiences in other countries.

Then, in April 2020, Chinese COVID reporting was frozen.

COVID mortality for the next 22 months was officially nonexistent. In February 2022, a small cluster of deaths was reported—due to the inclusion of mortality figures for Hong Kong (which had more open reporting policies). However, except for the Shanghai outbreak in the spring of 2022, China did not report a single new death on the mainland from mid-April 2020 until December 8, 2022, when the zero-COVID policy was canceled. Even when the Omicron variant slammed Shanghai in the spring of 2022—leading to tens of thousands of reported infections and a three-month near-total lockdown of a city of 25 million people, officials reported just three deaths from COVID (later revised to ten deaths).

After more confusion and testing halts, zero-COVID was lifted and the authorities adjusted the death toll to about 90,000. Then, in March 2023, the official daily death rate abruptly plunged back to near zero.

This pattern is an epidemiological impossibility. A disease agent as virulent as COVID-19—especially the Omicron variant, said to be as much as “30 times more infectious than the ancestral SARS-CoV-2” — could not simply disappear. While it is reasonable to believe that the Chinese government’s strict pandemic controls reduced COVID-19 infections and related deaths between mid-2020 and the country’s first Omicron outbreak in January 2022, the long flat-zero periods in the data record for 2022—when Omicron outbreaks were a constant struggle—are evidence that COVID mortality data for Mainland China has been and is still being suppressed.

2. COVID Infection and Mortality Rates in China vs. Close Comparables

China’s reported mortality rate – that is, deaths per 100,000 population – is implausibly low.

The mortality rates for Hong Kong, Taiwan, and Korea (countries that followed similar, strict zero-COVID policies) are between 1600 and 4000 times higher than China’s reported COVID mortality rate for the period from April 2020 (when Covid reporting was shut down) to December 2022 (when zero-COVID ended).

While it may be argued that Mainland China followed a stricter version of zero-COVID, it cannot account for this astronomical discrepancy.

Updating this to include deaths reported after the end of zero-Covid, The New York Times assembled data on COVID infection rates and mortality rates from the beginning of the pandemic through March 2023. Unlike many other sources, the Times database provides separate figures for Mainland China, Taiwan, and Hong Kong. (Singapore and New Zealand also followed very strict zero-COVID regimes, and are also included here.)

The difference in reported infection rates is extreme: 132 times higher for Hong Kong than for the mainland.

Moreover, the updated mortality figures in the Times’ study are still implausibly low.

Hong Kong is the best comparable. In general, Hong Kong followed a strict zero-COVID program similar to Mainland China. Yet despite this, and despite spending more than five times as much per capita on healthcare (approximately $3030 for Hong Kong alone versus $583 for China overall— a figure which includes HK), which should have improved treatment outcomes, Hong Kong reported a COVID death rate 30 times higher than the Mainland.

These gross disparities are indicative of a vast program of systematic underreporting. Health workers are said to have been pressured to “keep ‘COVID-19’ off death certificates to limit reported numbers.” Mortality figures have sometimes been released “accidentally” by local officials, and then quickly retracted. In December 2022, the central authorities changed the official criteria for assigning COVID as a cause of death. The British Medical Journal reported that as of late 2022

  • “China has effectively stopped counting COVID cases and deaths, abandoning mass testing and adopting new criteria for counting deaths that will exclude most fatalities from being reported.”

In July 2023, some Chinese provinces even deleted all mortality data, to avoid disclosing peripheral information (e.g., figures on cremations ballooning far above the normal level) that could be used to infer the true scope of the crisis.

3. Infection Rate vs. Mortality Rate

Here is the most decisive evidence of data manipulation.

The case-fatality rate (CFR) counts COVID deaths as a percentage of confirmed cases. A scientific study authored by researchers in Hong Kong and Shenzhen cited the following figures for COVID infections rates and mortality in Mainland China:

  • “As of 6 December 2022, mainland China has tallied just over 349,938 confirmed COVID-19 cases and 5,235 COVID-related deaths.”

This equates to a CFR of 1.5 percent, which is not out of line with other countries. (The U.S. CFR is 1.1 percent, according to Johns Hopkins data.) However, 88 percent of the reported Chinese deaths took place in the first three months of 2020, in Hubei province. After mid-April 2020 the CFR was just 0.2 percent.

Even this does not tell the full story. For two years, between April 21, 2020, and April 21, 2022, Chinese authorities reported 111,195 cases of COVID—but just 16 reported deaths. This works out to an impossibly low CFR of 0.01 percent. (These are all official Chinese government statistics.)

This is even more significant than the cross-country disparities in the infection and death rates. The principal claim for China’s zero-COVID policy is the reduction in the number of infections, not the reduction in mortality following infection. If zero-COVID is assumed to be effective, a lower rate of infection could be deemed a possible outcome—and indeed, some zero-COVID or “elimination” regimes in other countries do show this result, for as long as such regimes are maintained. However, once an individual is infected, zero-COVID does not impact mortality. The policy does not presume any improvement in the efficacy of treatment for COVID. The Chinese CFR should therefore be roughly similar to the CFR other countries.

This is not what we see. For example, the CFR in Hong Kong (a zero-COVID jurisdiction, with cultural and ethnic characteristics that are the closest to the mainland) is 33 times higher. The global CFR is 63 times higher.

This is prima facie evidence of data tampering. Zero-COVID is aimed at preventing the spread of the virus to reduce infection rates: It has nothing to do with treatment. In other words, we might expect a lower infection rate—but not a lower CFR. There is no evidence, and indeed no claim, that China has developed superior methods of COVID treatment that would lower the death rate among those who are infected.

In summary, as The Economist declared in 2023, “Official statistics are useless.”


In Part 2 of this analysis, we will examine the various approaches taken to provide a more realistic estimate of Covid’s public health impact on China.



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