The Missing Factor In Explanations Of China’s Economic Distress: COVID Part 2: Estimating The True Death Toll – Forbes

TOPSHOT - A memorial for Dr Li Wenliang, who was the whistleblower of the Coronavirus, Covid-19, ... [+] that originated in Wuhan, China and caused the doctors death in that city, is pictured outside the UCLA campus in Westwood, California, on February 15, 2020. - The death toll from the new coronavirus outbreak surpassed 1,600 in China on Sunday, with the first fatality reported outside Asia fuelling global concerns. (Photo by Mark RALSTON / AFP) (Photo by MARK RALSTON/AFP via Getty Images)

China abandoned its zero-COVID program in December 2022. Travel restrictions were lifted. Quarantines ended. The government stopped testing, stopped even collecting data related to COVID, and declared victory.

Many Western experts, taking it at face value, expected an economic boom. Typical was a February 2023 article in The Economist entitled What Pandemic? Chinas Ultra-Fast Economic Recovery. China, so they said, was back with a vengeance. The authors claimed to discern evidence of a surprisingly rapid consumer revival in the worlds second-biggest economy a trend so strong that the countrys reopening will boost global growth, perhaps uncomfortably.

True, the concrete indicia were sketchy. The Economist cited record attendance at a mausoleum (ambiguous?), and long lines waiting to catch cable cars at a popular tourist site. (Not typical metrics of economic performance.) Optimism rested in large part on the unusually liquid status of Chinese households, with savings greater than 100% of the countrys GDP, purportedly ready to drive a spending boom. The gung-ho account described the frenetic pace of revenge spending; a spree; and a splurge that will make a welcome contribution to global growth.

Paeans to the Great Chinese Growth Engine flooded the media. Released from the zero-COVID cage, the Chinese economy would roar back to business as usual. Even the sober folks at the Federal Reserve bought into it.

BusinessWeeks contribution was titled Welcome Back: China Rejoins the Party. It would be good news for the rest of us, too the easing of COVID restrictions may be the boost the flagging world economy needs.

[A passing comment a buildup of savings is often not seen as a sign of economic health, as economists since Keynes have realized. See Martin Wolfs commentary in The Financial Times from March 5 of this year Chinas Excess Savings Are A Danger.]

In any case, within months it was becoming clear that the projected recovery was not taking place.

The end of zero-COVID was not the end of COVID. Infections in China exploded, affecting more than a billion people in just a few weeks. No other country has experienced so many COVID cases in such a short period of time. The healthcare system was completely overwhelmed. And as a June 2023 report in Nature magazine warned

Assessing the full medical, social, and economic impact of the pandemic in China starts with understanding the true toll on the Chinese population. Massive outbreaks in other places (e.g., New Zealand, Singapore, and Hong Kong) following the end of zero-COVID policies offer analogies for what China is experiencing, but the surge there is much larger and more intense.

How much larger? It is hard to say. Chinese government statistics on COVID are useless (The Economists assessment), for reasons described in the previous column. But other types of government data can be used to estimate the true death toll, at least to a reasonable order of magnitude.

How many Chinese have died? Official and unofficial accounts diverge.

Beijings message has been triumphalist.

On the other hand

Chinas active suppression of COVID data makes it impossible to answer this question directly. Incidental data sources (such as the sudden and acute shortages of pharmaceutical products, or satellite images of clogged roadways and parking lots near funeral homes and crematoriums in Chinese cities) suggest the scale of the problem. But they do not easily translate into hard number estimates.

Analysts have used three main approaches to assess the true impact of COVID in China.

This is the most straightforward approach, and arguably the most convincing. It relies entirely on official Chinese government figures.

Death rates are generally very stable. In most countries today, the crude death rate from all causes rises gently as the population ages. Excess mortality is defined as a significant upward deviation from the long-term trend.

Beginning in 2019, China experienced a sudden and significant inflection in the crude death rate. The multi-year average rate of annual increase jumps by a factor of five and remains elevated.

Crude Death Rates in China 2009-2023

The total over four years from 2019-2022 amounts to about 1.6 million excess deaths. (2023 added another 800,000 excess deaths above the pre-COVID baseline.)

Surplus Deaths in China 2019-2022

The Economist magazine has modeled excess mortality extensively and with technical sophistication. As of July 2023, their model produced estimates of between 560,000 and 3.7 million excess deaths in China, with a central best estimate of just under 2 million deaths (roughly in line with my simple estimate provided above).

Excess Mortality in China 2020-2023, As Modeled By The Economist Magazine

The most recent assessment of excess mortality comes from an article published in the Journal of the American Medical Association on August 24, 2023.

In summary, it is clear that COVID-19 struck China hard, starting in 2019, and persisting over the past four years. The crude death rate skyrocketed, reflecting millions of excess deaths above the normal long-term trend.

This approach relies on observed ratios for infection and mortality in other countries (comparables) where COVID data is more complete and of higher quality. These ratios are then applied to the Chinese population to derive an estimate of the likely impact there.

Strong comparables would combine: (1) similar cultural and ethnic background; (2) similar economic systems; (3) similar zero-COVID regimes; and (4) more reliable data.

Hong Kong is the best case for comparison. The city maintained a zero-COVID regime (albeit less stringent than that on the mainland) until February 2022, when it was overwhelmed by Omicron. In March 2022, the British Medical Journal wrote:

In the 12 months following the breakdown of Hong Kongs zero-COVID regime, the cumulative COVID death count in Hong Kong increased by over 6000 percentfrom 213 to 13,370. (The increase in the U.S. over the same period was 22 percent.) This is evidence for the catastrophic impact of the Omicron variant on a poorly prepared population, It underscores the point that the return-to-zero in Chinas reported daily death rate after March 2023 is epidemiologically impossible. Applying Hong Kongs mortality rate of 184 COVID deaths per 100,000 population to Chinas population of roughly 1.4 billion people would yield an estimate of about 2.5 million deaths, which is in line with the excess mortality figures cited above.

A Stanford University study modeled Chinas death count based on Hong Kong and Korean experiences resulted in lower estimates: 987,455 and 619,549 maximal COVID-19 deaths, respectively, assuming the entire China population was infected. Leaked official Chinese reports indicate that infection rates for the Chinese population reached 80 percent to 90 percent within a few weeks after the lifting of zero-COVID in December 2022.

There are important differences, however, between China and even the closest comparables, which point to a more severe impact for China. These aggravating factors include:

Ultimately, estimates based on the comparables approach are roughly in line with estimates based on excess mortality, and are five to 30 times higher than the official COVID death count published by the Chinese government.

COVID rates for China can also be estimated from various public data sources that partially and/or indirectly correlate COVID mortality. In February 2023, The New York Times reported on the results of a number of different modeling approaches, which converged in an estimate of 1 million to 1.5 million Chinese deaths through the end of 2022, and before the real impact of the lifting of zero-COVID (again in line with the excess mortality calculations described in the previous section.) A Chinese-led study extrapolated from the Shanghai outbreak in Spring 2022 and estimated 1.6 million deaths by mid-2023.

Airfinity, a health data analytics group, modeled 600,000 deaths in the first month after the lifting of zero-COVID10 times Chinas official figure during the same time periodand 1.7 million deaths by April 2023. The Seattle-based Institute for Health Metrics and Evaluation forecast about 300,000 deaths in China from the end of zero-COVID through the first quarter of 2023. (This model has been widely criticized as prone to significant underestimates for many countries, and updating was paused at the end of 2022. Even so, its final forecast was 100 percent higher than the official Chinese figures.)

And as noted earlier, The Economists figure for COVID deaths is about 2 million (central estimate) as of July 2023 1500 percent higher than the official death tolls.

Chinas zero-COVID policy effectively meant zero reporting of COVID. The suppression of data began early and instinctively, and became the fixed official policy in April 2020. It did not really change even after zero-COVID was lifted in December 2022. Zero reporting continues to this day. The most basic data are apparently no longer even being collected.

Consideration of anomalies in the raw mortality figures, infection rates, and case-fatality rates all show impossibly low figures for China compared to other countries with similar demographic and policy profiles. Hong Kongs infection rate is 143 times higher than the infection rate reported for the Chinese Mainland, and the mortality rate is 30 times higher than the mainlands reported rate.

In particular, the extremely low reported Case-Fatality Rate (CFR) reported by China (described in the previous column) 33 times lower than the CFR of Hong Kong is medically inconceivable. The fate of an infected person in Mainland China cannot have been very different from that of a COVID victim in Hong Kong or anywhere else. In fact, the institutional deficits in Chinas healthcare system would imply less effective treatment of COVID patients compared to Hong Kong or Korea.

The number of Chinese killed by COVID was likely between 1.5 and 2 million through mid-2023, with estimates ranging up to 3.5 million at the high end. The number who became seriously ill would have been in the tens of millions, stressing the healthcare system, diverting resources from productive uses, and hobbling the economy. Because of Beijings active suppression of the key data, it may never be possible to completely isolate and quantify the effects of this factor, but it must be accounted one of the major contributors to Chinas current slowdown.

A delivery man walks past a mall at a business district in Beijing on May 16, 2022. - China's retail ... [+] sales slumped to its lowest in two years while factory output plunged, official data showed on May 16, capturing the dismal economic fallout from Beijing's zero-Covid policy. (Photo by AFP) (Photo by STR/AFP via Getty Images)

For more information, see Part 1 of this essay, here:

Continued here:

The Missing Factor In Explanations Of China's Economic Distress: COVID Part 2: Estimating The True Death Toll - Forbes