China’s zero-covid industrial complex

PRESIDENT XI JINPING’SGDPPCR zero-covid policy has been a plague on China’s firms and a headache for Western ones reliant on its suppliers and consumers. The 25m residents of Shanghai, the country’s commercial hub, have been confined to their homes since April 1st. Beijing, the capital, is teetering on the edge of lockdown. Rail and air travel on a recent national holiday were, respectively, 80% and 75% below the level during last year’s festivities. Retail spending has crashed. may shrink in the second quarter.Regardless, on May 6th the Politburo’s Standing Committee doubled down. China’s highest decision-making body vowed to fight against “any words or actions that distort, doubt or negate” Mr Xi’s crusade to quash covid-19. Gone was language like “reconciling zero-covid with growth” and “minimising the impact of the pandemic on the economy”, which sought to balance covid-control with economic growth. The stockmarket shuddered. Except, that is, for one industry. The market value of Dian Diagnostics Group, a maker of tests, soared by more than 10% after the Politburo’s pledge. Daan Gene, another big test-maker, and Yiling Pharmaceutical, which produces traditional Chinese medicine that has been heavily promoted as a covid treatment since 2020, also made gains.