The Missing Factor In Explanations Of China’s Economic Distress: Covid (Part 1: The Cover-Up) – Forbes
							May 5, 2024
							        WUHAN, CHINA - (Photo by Stringer/Getty Images)      
    Indeed. Estimates of Chinas economic performance in the past    two years diverge.  
        China's GDP Growth for 2022 and 2023, Beijing's Version vs        the IMF's Version      
    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.)  
        China's GDP 2014-2023  IMF's Version vs the Official        Chinese Version      
    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:  
    Then  in December 2022  China abruptly ended zero-Covid.  
    A relief consensus took hold; Chinas 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.  
    Goldmans report was titled After Winter Comes    Spring.  
    For investors, there would be upside  
    And even hope for the real estate industry there:  
    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.  
        Stock Markets  US vs China      
    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 Covids    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 Partys 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.  
    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 Chinas abandonment of zero-COVID in December    2022, The New York Times, in an article titled As Cases Explode,    Chinas Low COVID Death Toll Convinces No One, wrote:  
    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 Chinas 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.  
    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:  
    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. Chinas 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    reporteddue 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 2022leading 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.  
        New Reported Covid Deaths in China      
    This pattern is an epidemiological impossibility. A disease    agent as virulent as COVID-19especially 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 governments strict pandemic controls reduced COVID-19    infections and related deaths between mid-2020 and the    countrys first Omicron outbreak in January 2022, the long    flat-zero periods in the data record for 2022when Omicron    outbreaks were a constant struggleare evidence that COVID    mortality data for Mainland China has been and is still being    suppressed.  
    Chinas 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 Chinas reported COVID    mortality rate for the period from April 2020 (when Covid    reporting was shut down) to December 2022 (when zero-COVID    ended).  
        Covid Mortality Rates  China vs Comparables      
    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.  
        Covid Infection Rates  China vs Comparables      
    Moreover, the updated mortality figures in the    Times study are still implausibly low.  
        Covid Mortality Rates  China vs Comparables Including        Post-Zero-Covid Figures      
    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.  
        Observed Covid Mortality Ratios      
    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  
    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.  
    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:  
    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 COVIDbut 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 Chinas 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    outcomeand 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 ratebut 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.  
        Workers place barriers outside the closed Huanan Seafood        wholesale market during a visit by members ... [+]        of the World Health        Organization (WHO) team, investigating the origins of the        Covid-19 coronavirus, in Wuhan, China's central Hubei        province on January 31, 2021. (Photo by Hector RETAMAL /        AFP) (Photo by HECTOR RETAMAL/AFP via Getty Images)      
    In Part 2 of this analysis, we will examine the various    approaches taken to provide a more realistic estimate of    Covids public health impact on China.  
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The Missing Factor In Explanations Of China's Economic Distress: Covid (Part 1: The Cover-Up) - Forbes