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China is facing what could be the world's biggest COVID surge yet

ARI SHAPIRO, HOST:

Three years into the COVID pandemic, the world could be on the cusp of the biggest outbreak yet - in China. It's a stunning turn for a country that until just a few weeks ago was trying for zero transmission. Up to 800 million people in China could be infected in the next several months. That might set off more political protests in the country and rattle an already uncertain global economy.

To look at this from a few different angles, we've got NPR chief economics correspondent Scott Horsley, science correspondent Michaeleen Doucleff and China affairs correspondent John Ruwitch. Good to have you all here.

SCOTT HORSLEY, BYLINE: Good to be here.

MICHAELEEN DOUCLEFF, BYLINE: Hello.

JOHN RUWITCH, BYLINE: Hello.

SHAPIRO: John, a few weeks ago, the picture in China was so different. Give us a snapshot of what it looks like right now.

RUWITCH: Yeah, there is no doubt that there - that COVID is on the rise in China right now like never before. But we're kind of flying blind in terms of understanding the scope of this wave. There's no clear picture in terms of data, and that's 'cause the government basically eased testing requirements and really doesn't have the ability to keep accurate tabs. So we've got anecdotes. We've got social media posts and such.

Beijing, the capital, appears to have been hit hard. People there are describing entire circles of friends testing positive or organizations where half or more of employees have tested positive. There was a small poll on social media the other day, completely unscientific, but it showed a similar number of respondents, half or more, catching COVID in Beijing this month alone.

Also, there's a data scientist who's been keeping track of tabs on web searches in China for things like fever and words like cold. Those searches suggest that indeed there's a big outbreak underway in Beijing and that lots and lots of other places are also being hit. In terms of deaths, the government has reported almost nothing, but there too anecdotes are trickling out, mostly about older people succumbing.

SHAPIRO: So a lot of anecdotal evidence that things are getting worse. Michaeleen, I mentioned a forecast that 800 million people in China could get infected. What do the models show right now?

DOUCLEFF: Yeah. You know, you can make some predictions based on what's happened elsewhere. So take, for instance, Hong Kong. You know, last year they had kept - or for years, they had kept the virus at bay, right? And then last winter, they were hit with this massive omicron surge where half the population was infected very quickly. If that happens in China, which scientists think is likely, you're talking about on the order of 700, 800 million people infected in a short period of time because this surge, Ari, is growing very, very fast.

The number of cases is doubling in less than a day. And so you're going to have a high number of cases all at once. And that puts a huge amount of pressure on the health care system, especially in rural communities where the health care infrastructure is quite poor. And that's why researchers are worried that the death toll could be higher in these rural parts of China.

SHAPIRO: And when you've got those high numbers and so much spreading from one person to another, is there a chance that new variants could emerge and possibly...

DOUCLEFF: You know...

SHAPIRO: ...Spread beyond China?

DOUCLEFF: Absolutely. You know, there's no doubt new variants are going to emerge in China. They've emerged essentially everywhere else, including here in the U.S. And so I was talking to Jennifer Bouey about this question of a - of variants. She's an epidemiologist at Georgetown University. She says the concern with variants, though, is whether China's going to be transparent about them.

JENNIFER BOUEY: This will be critical because if there are new, more severe or deadly variants come out of this large scale of transmission and infection, then the world need to know to adjust for the treatment and the vaccine.

DOUCLEFF: You know, that said, there's no reason to believe that there's something unique about the situation in China that will create more severe variants or anything like that.

SHAPIRO: John, you previously reported on the economic impact of lockdowns. On the flip side, what's the economic impact of this kind of free for all and spike in infections?

RUWITCH: Sure. I mean, well, let's first - yeah, you're right. I mean, the economy was hurting already. Latest data was put out this week showed retail sales down in November, property investment slumping. Industrial output grew a lot slower than expected. Loosening COVID is actually supposed to have - it'd be good for the economy. But in the short run, this very abrupt about-face is going to make things worse. And we're seeing hints of that.

In Beijing, the streets are as empty as they were during the most harsh periods of lockdown. Restaurants are empty, although takeout business seems to be going along. There's a shortage of delivery drivers now because of the virus. Some districts in Beijing are actually asking people who are well to volunteer to deliver stuff around town. All of this is going to dent consumer activity, and it seems likely to ripple into manufacturing. Timothy Heath, a researcher at the RAND Corporation, put it this way in a call with journalists yesterday.

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TIMOTHY HEATH: The Chinese government is in a terrible dilemma. It's damned if it does; it's damned if it doesn't ease up restrictions on COVID. And the economy is looking pretty grim for China, at least for the near future.

RUWITCH: And to complicate things, Chinese New Year is a little over a month away. Hundreds of millions of people traditionally travel during that time.

SHAPIRO: Let's talk about what this could mean for the U.S. economy because, Scott Horsley, as we know, an earlier phase of this pandemic showed how supply chain disruptions in China can hurt American businesses and consumers. So what are you looking at now?

HORSLEY: Well, as you just heard Timothy Heath say, it's really a no-win situation. U.S. companies were already feeling the effects of China's strict COVID prevention policies. Now they could feel the fallout from relaxing those policies. Of course, a lot will depend on the severity of the outbreak and how long it lasts. This time of year, there's typically a lull in imports from China anyway.

Federal Reserve Chairman Jerome Powell was asked this week about how the outbreak might affect inflation, and he said it could cut both ways. If China's economy slows down, that could actually lower oil and gasoline prices around the world. But if the outbreak causes new tangles in supply chain, well, that could make inflation worse.

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JEROME POWELL: China faces a very challenging situation in reopening. You know, we've seen waves of COVID all around the world can interfere with economic activity. China, a very critical place for manufacturing and exporting - their supply chain's very important. We'll just have to see. It's a risky situation.

HORSLEY: In a way, this is kind of deja vu from what we experienced in early 2020. Before COVID really took hold here in the United States, we were watching the case counts in China back then from a distance and just waiting to see how it would play out here.

SHAPIRO: But have American businesses insulated themselves based on the lessons they learned in those early days?

HORSLEY: Some businesses have built up bigger safety stockpiles so they're better able to weather a temporary disruption. But if Chinese production's knocked out for an extended period of time, you're still going to feel the ripple effects here. Some supply lines that used to start in China have now moved to other countries, not because of the pandemic but because those tariffs that former President Trump imposed. But even when production of products has moved to Vietnam, say, many of the components are still coming from China. So it's just very hard to wall yourself off from that giant economy.

SHAPIRO: John, given everything that we're talking about, the impacts from health to economic, why did the Chinese government open up so quickly and abandon the zero-COVID policy so precipitously?

RUWITCH: Yeah, it's a great question. Two things I think became really clear in recent weeks in China. One was that people were very unhappy with the zero-COVID policy, and that was evident in the protests that we saw break out from Beijing to Shanghai all the way out west in Urumqi. And the second is that the economy is hurting. The authorities were definitely looking for an off-ramp. They were having discussions about it in November. Before all of this, they'd made some small changes. But I think very few people would have predicted this rapid a turnaround.

SHAPIRO: Michaeleen, we've talked about how transparency from China has been an issue in this outbreak. And so looking forward, how are we going to know what's actually happening there in the coming months?

DOUCLEFF: This is a big problem. You know, the World Health Organization thinks that this outbreak has been exploding in China for the last month or so. And, you know, we're really only hearing about it now. Some of the analysis on the internet searches, as John mentioned, social media suggest that places like Beijing or Yunnan province, the surge is already peaking there. So there's very little information. And we're kind of all behind on what's really happening there. So like John said, talking to people there on the ground, it is and is really going to be critical.

SHAPIRO: That is NPR science correspondent Michaeleen Doucleff, China affairs correspondent John Ruwitch and chief economics correspondent Scott Horsley. Thanks to all three of you.

DOUCLEFF: You're welcome.

RUWITCH: You're welcome.

HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.

Michaeleen Doucleff, PhD, is a correspondent for NPR's Science Desk. For nearly a decade, she has been reporting for the radio and the web for NPR's global health outlet, Goats and Soda. Doucleff focuses on disease outbreaks, cross-cultural parenting, and women and children's health.
John Ruwitch is a correspondent with NPR's international desk. He covers Chinese affairs.
Scott Horsley is NPR's Chief Economics Correspondent. He reports on ups and downs in the national economy as well as fault lines between booming and busting communities.