(Bloomberg) -- Three years into the pandemic, China is sticking to its Covid Zero policy despite heavy economic costs, growing unrest and isolation from the rest of the world.

Many expected President Xi Jinping to signal a pivot away from what has become a signature policy when he took the podium at the Communist Party’s congress this month. Instead, he defended the zero-tolerance strategy as one that saves lives, but offered no steer on when it’s likely to end. 

Xi’s absolute control over the party leadership and China has left experts debating what that means for the future of an approach that’s brought misery to millions. The brutal Shanghai lockdown earlier this year, overseen by Li Qiang — a Xi loyalist and China’s likely premier from 2023 — saw businesses upended and the city’s 25 million residents struggle to get even basic necessities. 

More on China and Covid Zero:

  • China’s Most Locked-Down City Shows Perils of Endless Covid Zero
  • China’s Tolerance for Xi’s Unyielding Covid Fight Is Cracking
  • China’s Covid Zero Could Last for Years Because It Works For Xi

In a bid to understand when the last Covid Zero holdout will buckle, if at all, Bloomberg News sought the views of a panel of experts in health, politics, economics and travel — some of them for the third time. While most are divided over the timeline, almost all agree on one thing China needs to open up: effective vaccination. 

We asked them all for the signs they’re looking for that would indicate China is moving away from Covid Zero. 

The Health Experts

Xi’s lack of clarity indicates there will be no change for now, said Huang Yanzhong, a senior fellow for global health at the New York-based Council on Foreign Relations. Huang previously expected the party congress to thrash out complaints about excessive virus curbs, which didn’t happen.

The appointment of Xi loyalists to the Politburo Standing Committee — China’s top decision-making body — points to the absence of any opposition to Xi persisting with Covid Zero, Huang said.   

Peter Collignon, a professor of infectious diseases at the Australian National University, and Chen Zhengming, an epidemiologist at the University of Oxford, both see China sticking to the lockdowns, mass testing and travel curbs of Covid Zero through winter, with tweaks not coming until next year — after the National People’s Congress (NPC), due to be held in March or April. China may be forced into a more pragmatic approach as lockdowns become less effective at eliminating Covid cases, particularly over winter, Collignon said.

Signs they’re looking for: Strong promotion of vaccination, particularly among the elderly; easing of travel restrictions; a triage system where Covid patients with mild symptoms don’t have to be hospitalized.

The Political Observers

Frank Tsai, a lecturer at the Emlyon Business School’s Shanghai campus, viewed the way Covid Zero was handled at the congress more positively. The party didn’t paint itself in a corner with even stronger rhetoric, giving Xi room to ease Covid Zero in future, he said.  

“This essential continuity was something like an ostrich with its head in the sand,” Tsai said. “Is that bad? Not necessarily.” 

China Plans for Years of Covid Zero With Tests on Every Corner

Tsai expects no substantial changes to the policy through 2023, but said Xi could still declare “mission accomplished” any time — strictly in terms of deaths avoided. Xi is less concerned about social and economic costs, he said. 

Chen Gang from the National University of Singapore’s East Asian Institute predicts a full reopening by next October if the pandemic doesn’t worsen. 

Jean-Pierre Cabestan, an emeritus professor of political science at Hong Kong Baptist University, said pressure on China’s government is getting stronger as the public’s patience wears thin. He too sees the NPC early next year potentially offering clues as to Covid Zero’s future.

Signs they’re looking for: Overseas visits by Xi before the end of this year and frequent high-level exchanges; the Formula One Grand Prix scheduled for April in Shanghai going ahead, along with the Asian Games in Hangzhou in September.

The Market Watchers

Most analysts don’t expect any substantial shift before the NPC, but some aren’t ruling out the prospect of a surprise. Mark Mobius, the veteran investor and emerging markets expert, said China may start easing Covid restrictions by the end of this year, mainly because the economy is in trouble and the government “needs money badly.”

“China has no choice but to open up to ensure the economy can function,” he told Bloomberg. 

Bank of America economists including Helen Qiao predict a sooner-than-consensus reopening. With power more concentrated, the decision on when to ease is even more dependent on Xi’s view. Two conditions for him to shift toward easing have been met: Political certainty and public support. Anthony Wong, lead manager for the $1.2 billion All China Equity Fund at Allianz Global Investors, said an exit from Covid Zero will happen “hopefully within the next six months,” calling his view a “contrarian call.”

Bruce Pang from Jones Lang LaSalle Inc. and Rajat Agarwal from Societe Generale SA, said they don’t expect an exit until the second half of 2023. The new Standing Committee is stacked with members more focused on national security than economic reforms, Agarwal said.

Signs they’re looking for: Xi shifting his rhetoric to declare victory over Covid; softer implementation of Covid Zero measures.

The Economists

If China doesn’t exit Covid Zero by 2025, it could have long-term effects, and make it difficult to deliver on targets set in China’s 2035 plan to become a middle-income nation, according to Bloomberg Economics. Social unrest may also be an issue. 

Alicia Garcia Herrero, chief Asia Pacific economist at Natixis, said she expects China to start mass producing more effective mRNA vaccines by at least the summer of 2023, now that a Chinese mRNA shot has been approved in Indonesia for emergency use.  

“Vaccination rate and efficacy are quite essential and we cannot underestimate this” because the level of immunity to Covid in China is very low, Herrero said, adding that would be an issue in reopening.

Natixis estimates Covid Zero restrictions shaved 2.3 percentage points off GDP growth from consumption channels this year. China would likely want to avoid that in 2023, Herrero said.

“Hopefully we see some big announcements on the vaccination booster and possibly in mRNA vaccines soon,” she said. 

Another condition for easing is sufficient medical resources, and China’s hospitals appear ill prepared to deal with an onslaught of infections, said Shuang Ding, chief economist for Greater China and North Asia at Standard Chartered Bank. The public’s perception of Covid is also a big challenge. If Chinese continue to see Covid as a life-threatening disease, those with light symptoms may rush to see doctors and squeeze hospital capacity, he said.

Signs they’re looking for: Availability of sufficient mRNA vaccines, higher vaccination rates and improved hospital capacity.

The Travel Professionals

The current approach will likely continue in the near future, said Jonathan Kao, the Greater China managing director of BCD Travel. The government is still being cautious about Covid and weighing the risks of a mass outbreak if it lowers its guard, he said.

“I think the calculation will be based on minimizing loss of human lives, especially for the elderly population,” Kao said. 

Gary Bowerman, director of Check-in Asia, a travel and consumer trends consultancy, expects a gradual increase in international flights and possibly reduced quarantine periods, but thinks entry restrictions will remain stringent. While the whole industry has been looking for even the smallest sign of policy change, expecting Covid Zero and its border curbs will be quickly dismantled is wishful thinking, he said. 

Another condition for easing is sufficient medical resources, and China’s hospitals appear ill prepared to deal with a sudden spike in infections, said Shuang Ding, chief economist of Greater China and North Asia at Standard Chartered Bank. The public’s perception of Covid is also a big challenge. If people continue to see Covid as a life-threatening disease, those with light symptoms may rush to see doctors and squeeze hospital capacity, he said.

Subhas Menon, director general of the Association for Asia Pacific Airlines, pointed to the instant benefits to the economy from opening up.

“Japan has recently reopened and they’re seeing a surge in bookings -- the economy will benefit,” Menon said. “Those Asian markets that have opened up have more resilient GDP growth. Hopefully Chinese authorities will see the benefits of opening up.”

Signs they’re looking for: Easing of travel restrictions, including shorter quarantines; a concerted vaccination push.

--With assistance from Linda Lew.

©2022 Bloomberg L.P.