Workers in protective suits wait for people at a nucleic acid testing site, as the coronavirus disease (COVID-19) outbreak continues, in Shanghai, China, December 9, 2022. Photo: REUTERS/Aly Song

As China seeks to live with the virus, COVID-control industries face decline

More than 30 local governments have cancelled tenders for services and products related to COVID control

Reuters December 16, 2022

Like most Chinese, Beijing resident Wang was happy and relieved when she heard last week that China was dropping almost all of its zero-COVID policy curbs. A day later though, the 43-year-old lost her job as one of the city's many hazmat-suited COVID swab testers.

"The leader of our group told me in person I was no longer needed because of the new policy," she told Reuters, declining to give her full name.

In the wake of unprecedented protests over oft-draconian lockdowns, the Chinese government eased some restrictions early this month before abruptly abandoning most control measures - including mandatory PCR mass testing conducted throughout much of the country.

That U-turn has meant a change in fortunes overnight for those companies as well as firms involved in quarantining, COVID-tracking and movement-monitoring products and services.

The industries had become big business over the course of the pandemic and are huge employers even if precise statistics are hard to come by.

Analysts' estimates gathered by Reuters in May had put China's planned COVID-related spending this year - of which these industries formed a large part - at around $52 billion.

Some less conservative estimates had even put this year's potential cost of mass-testing alone - with commuters in big cities requiring negative tests every one or two days - at 1.5% to 1.8% of China's gross domestic product - more than Qatar's GDP.

Tenders dropped

In the past two weeks, more than 30 local governments have cancelled tenders for services and products related to COVID control, a Reuters review of tenders showed.

These included a tender to regularly disinfect a quarantine hotel in Shenzhen, one for lockdown supplies for a Chengdu sub-district and one to renovate a COVID-testing laboratory in Shandong province.

Some also dropped plans to buy software that tracks the spread of COVID or alarms for doors of people under lockdown to monitor if they left their homes.

"According to the national policy and changes in the epidemic situation, the purchaser now terminates the nucleic acid sample distribution service project in Gongshu District, Hangzhou," read one announcement published on Tuesday, referring to PCR testing.

Firms that have reaped huge profits from PCR mass-testing have seen their shares slide this month. Shanghai Labway Clinical Laboratory has tumbled 11%, Guangdong Hybribio has dropped 8% while Dian Diagnostics Group Co Ltd has lost 5%.

The companies did not respond to Reuters requests for comment.

It remains to be seen just how painful China's dismantling of its COVID-control infrastructure will be for companies and their staff.

Over time, the return to more normal economic activity should help more people find jobs. Local governments are also expected to divert resources into coping with COVID.

China's new vaccination push focused on the elderly could provide employment for laid-off testers while local authorities may hire staff to support vulnerable or elderly residents staying at home, said Alicia Garcia-Herrero, chief economist for Asia Pacific at Natixis.

"All the money that went into mass testing, it will not just disappear, when you increase expenditure like this, it is hard to cut it back."

Wang, who had only gotten her job as a swab tester less than three weeks prior to being laid off, said it was annoying to be job-hunting again. But she did not appear to mourn the loss of work that meant walking for hours on end in a sweaty hazmat suit while dealing with grumpy residents.

"At least the economy will get better with these changes, so it will be easier for me to find a job," she said.

($1 = 6.9605 Chinese yuan)


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