China’s zero-Covid policy pushes cash-strapped local governments to the brink

  

China’s zero-Covid policy pushes cash-strapped local governments to the brink

• China is clinging to a zero-tolerance approach to the pandemic that relies on stringent lockdowns, mass testing and quarantine in government facilities
• But the cost of maintaining the strategy is growing and many local governments are struggling to balance debt control with strict virus prevention measures

Local governments in China are facing a growing financial burden to meet Beijing’s hardline zero-Covid strategy amid rising health care costs and efforts to control debt, analysts said.

China is battling its biggest virus surge in two years and numerous cities have imposed travel bans and lockdowns, including tech hub Shenzhen, which have shaken economic stability and global supply chains.

“The outbreak is currently the biggest macroeconomic event in China,” Tianfeng Securities, a China-based investment bank, said on Thursday.