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Has been updated: March 20, 2022 06:44 IST
Beijing [China]March 20 (ANI): China’s Zero-COVID policy puts underfunded local governments at risk in rising health care costs and debt management efforts.
According to the Think Tank Policy Research Group (POREG), analysts said China’s local governments are facing increasing financial burdens to meet Beijing’s hard-line Zero-COVID strategy.
China has been fighting the biggest virus surge in two years, and many cities have imposed travel bans and blockages, including Shenzhen, a high-tech hub that has shaken economic stability and the global supply chain.
China is sticking to a zero-tolerance approach to viruses that rely on strict blockades, mass inspections and quarantine in government facilities.
“The situation across the country is certainly tough, and there is pressure on health and finance from existing models. Globally, pandemic control policies are being coordinated and the potential for coordination in China is increasing.” Tianfeng Securities, a China-based investment bank, said Thursday.
Meanwhile, China’s international financial hub and logistics center, Shanghai, has been fighting the worst COVID-19 outbreaks since the start of the pandemic.
Some local governments impose strict containment measures. In addition, extensive testing has added another financial burden to the tense local public finances, POREG said.
Most new infectious diseases-Omicron variants are located in the northeastern part of Jilin Province and have been blocked since the end of last week.
In addition, the cost of maintaining the strategy is increasing. In 2020, the central government funded local governments to help fight pandemics, but local authorities had to rely on their own income since last year, POREG reported.
Suzhou, west of Shanghai, said last month that it had already spent 120 million yuan (US $ 18.8 million) in the fight against the outbreak that began on February 13. Funds were spent on protective equipment, nucleic acid testing, infrastructure and medical care.
Jiang Fei, Chief Macro Analyst at Great Wall Securities, estimated that the cost of high-volume nucleic acid testing would be 24-48 yuan per person in China.
According to 2020 data released by the Chinese government, this is a heavy burden for many local governments with a population of 1 million or more, and POREG reports that the medical expenses of each resident are usually less than 200 yuan per year. I am.
As a result, municipal containment policies are driven primarily by financial constraints, POREG said.
In addition, the central government is strengthening its grip on local government debt to prevent fiscal collapse. This is a move that has already affected the funding capacity of some regional economies. Local government revenues from the sale of land were also hit by the slowdown in the real estate market.
According to analysts, maintaining economic growth and reducing debt is difficult for many local governments, and Beijing may allow debt regrowth, POREG reported. (ANI)
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