Escalation of Omicron Could Lead China to Double Down Zero COVID Stance
An outbreak of Omicron could lead China to implement full-scale lockdown which could potentially add to further bottleneck in the supply chain 
An outbreak of Omicron could lead China to implement full-scale lockdown which could potentially add to further bottleneck in the supply chain
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China maintaining its zero-COVID approach might enforce full scale lockdown as the new omicron variant raises concerns on renewed wave of COVID-19 jeopardizing full scale reopening as expected earlier.
As reported by CNBC, Mark Williams, Chief Asia Economist at Capital Economics said, “The spread of highly transmissible variants may ultimately make the strategy untenable. But in the short-term, the authorities are more likely to double down,”.
He further added, “intermittent local lockdowns will continue to hit activity directly, while worries of being flagged as a close contact will keep many people at home,”.
The omicron variant was first detected in South Africa and has been marked as “variant of concern” by World Health Organization (WHO) due to large number of mutations.
Helen Zhu, managing director of investment firm Nan Fung Trinity said to CNBC, “If omicron turns out to be a major threat, I think China will certainly continue to lengthen the period of staying isolated,”.
In the scenario China implements full lockdown, Chinese ports are also likely to be shut down which could potentially lead to another supply chain crisis that has been strained for months adding to inflation.