How zero-Covid was a costly lesson for China’s local governments

But in the city of Guangzhou alone, the government built 16 of the hospitals providing nearly 40,000 beds and another 14 simpler quarantine facilities with 28,000 beds by November last year, just weeks before the zero-Covid policy was scrapped, Guangdong-based news site Sfccn.com reported.

Elsewhere, Zhejiang province spent 43.4 billion yuan and Beijing 30 billion yuan on Covid containment last year, while the impoverished province of Shaanxi spent 19 billion yuan, Caixin reported.

Since the scrapping of the zero-Covid policy late last year, most local governments have said little about what will happen to the fangcang.

Some of the centres have reportedly been upgraded to permanent community healthcare facilities.

But many others were demolished or left idle.

In Shanghai, for example, some of the centres were disassembled and sent to incinerators, according to financial news site Yicai.com.

In Jinan, Shandong province, the government is considering turning some of the facilities into dormitories.

While we do not know to what extent these hospitals drained local coffers or increased local government debt, some governments already appear to be desperately short of money.

So much so that last year, a district government under the city of Yantai in Shandong said it planned to issue “fangcang” bonds. The idea was derided online and the plan was apparently abandoned amid the public backlash.

Another area of huge zero-Covid expenditure were the regular PCR tests across the country.

The stock price of many of the manufacturers of these tests soared in 2020 and 2021 with the promise of massive windfall profits.

Those profit margins were dented when the government put a cap on the procurement prices of test kits, but official expenditure on swab tests remained huge due to the number of regular tests performed.

According to estimates by Chinese brokerage Zheshang Securities, China would have to spent at least 215 million yuan every day if 83 million tests were performed daily. That means the country could have spent over 46 billion yuan on tests alone from June to December last year.

And not all those tests were value for money. Authorities in the northwestern province of Gansu took Lanzhou Nucleus Huaxi Laboratory to task for uploading faulty PCR test results – only to find that dozens of other PCR test companies were registered under the owner’s name.

Many internet users began to question whether there was collusion between some PCR test makers, service providers and local governments.

Another major cost centre were the millions of test booths built across the country to ensure anybody in a major could get a test within a 15-minute walk. Now the question is how these booths can be redeployed.

As the pandemic stretched out into 2020 and 2021, China repeatedly touted its ability to mobilise huge resources quickly to keep cases to a minimum. While it can be a strength in times of crisis, this ability can also result in huge waste and even create groups with an interest in deterring change.

China has long resorted to political campaigns to mobilise resources and implement its policies. However, what happened last year was a costly lesson that foresight is just as important as the ability to move mountains.