For most of the world, the depths of Coronavirus are a soon-to-be distant dream. Infection rates are far lower than they were 11 months ago – around 300,000 new cases were reported in the world on December 18th, compared to 3.7 million cases on January 19th. The number of people who die every day is also far lower, being 787 on December 17th compared to over 8000 on January 17th. Perhaps one of the greatest indicators that the globe has beat Covid was seen in this month’s World Cup in Qatar. The final saw Argentina play France in a stadium of 88,996 people, with no social distancing and no mask requirements. Fans in China must have drooled at the sight.

Mr Xi’s radical, draconian and short sighted zero-Covid policy has failed miserably. His swift pivot away from this policy has not only made this strikingly clear but has opened the gateways to a covid wave of catastrophic proportions. In a country which has been under lockdown for 3 years, there has been ample time to prepare for a zero-Covid reversal – yet it appears China is not ready. A model by The Economist shockingly found a potential 1.5m death toll in the coming months as a result of the new policies. This is of course the worst-case scenario, one in which Covid is allowed to infect freely and adequate care is in short supply – the description of the status quo. Emerging evidence on the ground suggests that the surge has begun. Hospitalization numbers have exploded, hospital beds are scarce, and crematoriums have lines of vehicles in waiting. The Financial Times reported that half of Beijing might currently have the virus – scenes from an apocalyptic ground, of empty streets, and closed stores speak to validate that claim. Yet, Mr Xi’s government is yet to report a single death since December 4th.

Its worthy to note that authorities have begun large scale booster drives to counteract waning vaccination protection, and imports of Paxlovid, Pfizer’s anti-viral medication, have risen. However, even with these measures millions will inevitably be infected. Is this worth the economic recovery many claim will come? It’s a price all countries have paid so far. But the idea that this relaxation phase will lead to an economic recovery is itself debatable. A survey by World Economics covering 2300 companies conducted between 1-16 December found that Chinese business confidence is at its lowest since 2013. Small services have been hit the hardest, with many reporting a complete run out of liquidity. A wave of cases and empty streets isn’t going to help. Following this sentiment, estimates predict Chinese GDP growth of just 3% this year, its lowest in half a century. This slowdown in growth is set to continue far in the first quarter of next year, with labour shortages becoming a common occurrence as workers turn sick, and an exacerbation of supply chains as a response, which channels itself into a global slowdown due to China’s export dominance in the consumer goods market. May it even raise inflation? Economists are beginning to ask. Central banks across the globe are currently justifying a slowdown in inflation, China further complicates this assessment.

Several multinationals are already bracing themselves for a strain on their supply chains, or rather are already feeling the impacts. Apple is the perfect example here. Protests erupted at Foxconn’s mega factory in Zhengzhou last month due to quarantine measures and unpaid wages, putting an end to Apple’s 14 quarter growth streak as production halted – although the factory is back and functional, a rise in cases, likely due to the heavy concentrations of people in Zhengzhou, will push Apple back once again. It is this reason, coupled with the evident change in Cook’s political relationship with Beijing, which is pushing Apple to reconsider moving manufacturing to the likes of India and Vietnam. Could a Covid outbreak catalyse other MNCs to consider a similar move? A remaining unknown is, from the public health perspective, how China’s pandemic impacts the global pandemic. The biggest threat to vaccinated populations is mutations, and letting Omicron run rampage through the largest population on earth will almost certainly create sub-variants and in the worst case, whole new variants. What if these have higher reproductive rates and greater immune-escape properties? We may all return to the depths once again.

China’s Covid curse is most certainly our curse too. In an economic sense, what happens in the largest exporter on earth happens to most of us. This coming Covid wave may also prove a turning point in how Multinationals interact with the nation and supply chains. From a mere health consideration, the wave also threatens the immunity we’ve created and naively believe will hold. What happens now is up to Mr Xi and the incredible taskforce his government must assemble to protect the Chinese economy in 2023, respond to an incoming health crisis and balance public unrest. The world is watching.