Kristalina Georgieva, chairman of the International Monetary Fund, is urging Beijing to immediately revise its zero-tolerance policy to the pandemic, warning that it could jeopardize the recovery of the global economy.
At a virtual panel at the World Economic Forum, Georgieva said that what “COVID is teaching all of us is that a highly transmissible variant may be much more difficult to contain without a dramatic impact on the economy.”
She argued that Beijing did not need to use the same stringent measures with the Omicron variant, as it is much less lethal than the Delta strain.
As China continues to battle COVID-19 outbreaks nationwide just two weeks before the Winter Olympics, millions more people have been placed on lockdown. Hong Kong has also prohibited transit passengers from 150 locations.
On Jan. 17, the Chinese national health commission reported 110 new locally transmitted Covid-19 cases, 87 in Henan, 13 in Shaanxi, and 10 in Tianjin.
News cases in Henan, which also included Omicron instances, put five million residents in Anyang under lockdown on the evening of Jan. 17.
The IMF leader said that China’s lockdowns disrupted consumer spending. She was also unhappy that while the market needed subsidies and lowered interest rates, the Chinese regime had hastily cut off financial assistance to people and companies.
The People’s Bank of China had reduced the main mortgage rate earlier this week lowered the one-year loan prime rate by ten basis points, from 3.8% to 3.7%. It was the first key rate cut since April 2020.
According to CNBC, Nomura’s Chief China Economist Ting Lu said that the effects of the loan prime rate cuts “will be quite limited, as these cuts are too small to have a material impact.”
Ting explained, “They are unlikely sufficient to clear up the real bottlenecks, and because rates on existing mortgage loans will not be reset this year.”
Ting and other analysts believe that more rate cuts could be introduced later.