China’s Delta outbreak tests Beijing’s faith in its homegrown COVID vaccines

As of Wednesday, China has recorded nearly 500 cases in the past two weeks across 18 different provinces stemming from an outbreak in the southern Chinese city of Nanjing. The outbreak started after airport workers contracted the Delta variant of COVID-19 while cleaning an airplane arriving from Russia on July 20, Nanjing city officials announced on Friday.

In response, Chinese officials are relying on a now well-worn, zero-tolerance playbook to stamp out outbreaks across the country, instituting localized lockdowns, restricting travel, and conducting mass testing in places including China’s capital, Beijing, and the original epicenter of the pandemic, Wuhan.

China has successfully deployed such measures since the beginning of the pandemic to control periodic local outbreaks. But China’s return to the containment strategies of early 2020, even after deploying enough vaccines to cover 60% of its enormous population, suggests the government lacks faith its homegrown jabs and is unwilling to move past its “COVID-zero” policy, even as Delta threatens to exert a substantial toll on the economy.

COVID-zero

To contain the Delta-driven outbreak, Chinese authorities across the country are resorting to some of the most intense social-distancing measures since the lockdowns they deployed in Wuhan in the early stages of the pandemic.

Officials have effectively sealed off Zhangjiajie, a city of 1.5 million in central China, after recording 13 infections in the past few days, barring residents and visitors from leaving while the government conducts a citywide mass testing campaign. The 1.2 million residents of the nearby city of Zhuzhou have been under a three-day stay-at-home order since Monday while the city conducts its own testing campaign.

In Beijing, authorities have instituted localized lockdowns and shut down some bars and public gatherings like concerts after the city reported its first locally transmitted case in six months. Wuhan is also undergoing a testing campaign for all 11 million of its residents after recording seven local cases.

Chinese authorities across the country have also urged citizens to avoid all nonessential travel and avoid leaving the provinces where they live. China is also urging citizens to stop all “non-urgent and unnecessary” international travel and said it will only issue new passports to people who need them for study or work purposes.

“This is the worst outbreak since Wuhan last year,” says Yanzhong Huang, a senior fellow for global health at the Council on Foreign Relations. “The Chinese government has upped the ante by pursuing containment measures in a much more aggressive and expansive manner…But even the world’s most stringent measures cannot prevent this [Delta] variant from spreading.”

Economic toll

As a result of the outbreak, Japanese investment bank Nomura downgraded its forecast for China’s economy from 8.9% growth in 2021 to 8.2%. For the third quarter, Nomura has lowered its projection from 6.4% growth to 5.1%.

Victor Shih, a Chinese politics and economics expert at the University of California at San Diego, says that containment measures related to the new outbreak represent one of the most significant threats to China’s economy since lockdowns at the beginning of the pandemic.

Service sectors like tourism and bars and restaurants are particularly at risk after showing strong signs of recovery. Earlier this year, tourism had rebounded to pre-COVID levels during China’s May Day and Tomb Sweeping holidays. “Tourism actually had been picking up quite robustly,” says Shih. “And that probably will weaken substantially this month.”

Derek Scissors, chief economist at China Beige Book, says that China’s manufacturing sector will likely remain resilient even if the Delta variant continues to spread, given the country’s track record of beating back the virus.

“The Delta variant can, of course, interrupt manufacturing,” says Scissors. “But I don’t think China is going to be worse affected than most other countries, which means even if manufacturing is cut for a couple months, it’s not going to cause a global problem.” Other manufacturing hubs in Asia like Vietnam and Indonesia have instituted lockdowns amid new Delta-driven waves of COVID-19. In July, Bank Indonesia, the country’s central bank, downgraded Indonesia’s economic growth forecast to 3.8% from 4.6% amid a devastating wave of infections. The Asian Development Bank recently slashed its growth target for Vietnam to 5.8% from 6.7%, owing to the country’s battle with COVID-19.

Vaccine campaign

China’s large-scale and speedy rollout of COVID-19 vaccines has not appeared to soften the government’s intense focus on quashing even a single infection.

“We cannot relax,” Zhong Nanshan, China’s top epidemiologist, said at a meeting in Guangzhou on Saturday. “We must pay attention to the control measures.” Zhong also said that China needed to reach an 83% vaccination rate to achieve herd immunity, but did not say whether China would loosen restrictions after getting to that figure.

China has now delivered over 1.7 billion vaccine shots domestically, nearly five times as many as the U.S. The total is enough to fully vaccinate 60% of China’s 1.4 billion citizens, and vaccine coverage of adults in major urban centers like Beijing and Shanghai is over 91% and 85%, respectively.

For its campaign, China has largely relied on inactivated COVID-19 vaccines from private firm Sinovac and state-owned manufacturer Sinopharm. Zhong said recently that the vaccines are 100% effective against the Delta variant in preventing severe disease but did not provide data to back up the claims. The World Health Organization approved Sinopharm’s and Sinovac’s jabs in May and June, respectively, and said they had proved 79% and 51% effective, respectively, in preventing symptomatic cases of COVID-19 in clinical trials. But that was before Delta became the world’s dominant strain of COVID, and little is known about how the vaccines are performing against the variant.

Huang says China’s continued reliance on aggressive pandemic prevention measures are a “function of China’s lack of confidence in its own vaccines.” The inactivated vaccines are likely preventing some severe disease and death from the Delta variant, Huang says, but their efficacy has likely waned against Delta given that even the most effective mRNA vaccines are proving less protective against mild infections of the strain. Malaysia announced in mid-July that it would stop using Sinovac’s vaccine in its campaign amid concerns about its efficacy, while governments like Indonesia and Thailand have reportedly appeared to lose confidence in the jabs, too. The COVID deaths of 131 health care workers in Indonesia, most of whom received Sinovac jabs, prompted medical professionals last month to question the efficacy of the vaccine.

China has not yet approved mRNA vaccines like the BioNTech jab, despite having access to 100 million doses.

More broadly, China’s unwillingness to use the vaccines as a benchmark for reopening its borders that have been shut to nonresidents since March 2020 or enforce looser containment policies when there’s an outbreak may mean that the measures will remain in place for the foreseeable future.

Huang previously thought that the Winter Olympics in Beijing in February 2022 would be cause for China to relax its policies, but that no longer seems realistic given the severity of the current outbreak, he says.

Shih argues that a more realistic date for the easing of containment measures would be after China’s 20th National Party Congress, a political meeting of China’s top leaders where President Xi Jinping is expected to vie for an unprecedented third term. The meeting is likely to be held in October 2022.

“As the diplomatic and economic costs accumulate in the next year, I think there will be an [internal] push to persuade Xi to go another way…and gradually open up,” says Shih. “But I think the most likely outcome in the next 12 months is status quo to continue with the zero-COVID approach.”