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A woman gets a routine COVID-19 throat swab at a testing site displaying the rules and regulations in Beijing, Monday, Aug. 29, 2022.Andy Wong/The Associated Press

China’s strict COVID-19 policies are damaging the country’s economy at a time of growing instability, a prominent Chinese think tank warned this week in a swiftly censored report.

The country is currently facing outbreaks in Tibet, the Xinjiang region and the southern island province of Hainan, and the government has imposed new curbs on movement in the manufacturing hub of Shenzhen, across the border from Hong Kong.

Newer iterations of the coronavirus, particularly the Omicron variant, have severely tested China’s “zero COVID” policy, which was largely effective at containing infections and avoiding countless deaths in the first two years of the pandemic.

But Omicron, while highly transmissible, typically results in less severe cases of COVID-19, with a lower rate of hospitalization and mortality, think tank Anbound said in a report published this week and titled “It’s Time for China to Adjust its Virus Control and Prevention Policies.”

“Omicron has not led to a run on medical resources in many countries,” the report’s unnamed authors wrote, and “by August this year, most countries in the world had emerged from the pandemic and entered a relatively stable recovery stage.”

China, however, “is still following the strict prevention and control measures it adopted two years ago,” they continued. “China’s economy is at risk of stalling” owing to the “impact of epidemic prevention and control policies.”

Founded in 1993, Anbound says it has served the Chinese Communist Party’s Central Financial and Economic Leading Group and has provided research to government agencies and financial institutions.

The report was published on the think tank’s WeChat and Weibo social-media accounts on Aug. 28 but was deleted by the following day. That act of censorship actually attracted more attention than the report’s somewhat mild criticisms of official policy, which had not generated much discussion on the Chinese internet.

While they do not blame themselves, China’s leaders have acknowledged the economic challenges the country is facing as a result of pandemic restrictions.

Beijing has set a GDP growth target of 5.5 per cent for this year, its lowest in three decades. Many banks and analysts expect the country to miss even that relatively modest target, with Goldman Sachs forecasting “sluggish” growth of closer to 3 per cent.

Last week, the State Council announced a 300 billion yuan ($73-billion) stimulus package to boost investment and consumption. On Monday, Premier Li Keqiang promised to “resolutely introduce a package of policies and follow-up policies to stabilize the economy.”

Previous efforts were undermined by pandemic curbs, particularly the stringent lockdowns in Shanghai and other cities, which dragged down economic growth and sapped investor confidence.

Anbound said the impact of repeated shutdowns this year is more severe than last year’s, adding that the “freezing effect” on the economy may be even worse than in 2020, at the beginning of the outbreak, when the whole country shut down temporarily.

A survey released Monday by the U.S.-China Business Council, an organization representing more than 270 companies, found optimism among members of the Chinese business community had dropped to a record low.

“China’s COVID-19 strategy now poses the top challenge to U.S. companies, displacing U.S.-China relations, which ranked as the top concern for four consecutive years,” that report said. “The looming possibility that companies will again be forced to partially halt operations due to lockdowns and the impacts of local controls on consumer demand have undermined confidence in the business environment.”

With reporting from the Associated Press and Alexandra Li

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