The AP Interview: IMF head urges China to end mass lockdowns
BERLIN — It is time for China to move away from massive lockdowns and toward a more targeted approach to COVID-19, the head of the International Monetary Fund said days after widespread protests broke out, a change that would ease the impact to a world economy already struggling with high inflation, an energy crisis and disrupted food supply.
IMF Managing Director Kristalina Georgieva urged a “recalibration” of China’s tough “zero-COVID” approach aimed at isolating every case “exactly because of the impact it has on both people and on the economy.”
Georgieva made the comments in a wide-ranging interview Tuesday with The Associated Press in which she also cautioned it is too early for the U.S. Federal Reserve to back off on its interest rate increases and held out hope that an energy crisis driven by Russia’s war in Ukraine will speed the push into renewables in Europe. She also called increasing hunger in developing countries “the world’s most significant solvable problem.”
In China, protests erupted over the weekend in several mainland cities and Hong Kong in the biggest show of public dissent in decades. Although some restrictions have been relaxed, authorities have not shown any willingness to abandon their larger strategy of keeping millions of people in their homes for months at time.
“We recognize the importance of moving away massive lockdowns and being very targeted in restricting,” Georgieva stated Tuesday in Berlin. “So that targeting allows us to limit the spread of COVID without significant financial costs. “
Georgieva also urged China to look at vaccination policies and focus on vaccinating the “most vulnerable people.”
A low rate of vaccinations among the elderly is a major reason Beijing has resorted to lockdowns, while the emergence of more-contagious variants has put increasing stress on the effort to prevent any spread.
Lockdowns have slowed everything from travel to retail traffic to car sales in the world’s second-largest economy. Georgieva urged it “to adjust the overall approach to how China assesses supply chain functioning with an eye on the spillover impact it has on the rest of the world.”
The Washington-based IMF expects the Chinese economy to grow only 3.2% this year, on pace with the global average for the year.
The Communist Party has taken steps to follow Georgieva’s advice, namely by focusing on isolating neighborhoods or buildings infected rather than whole cities, and making other changes that it claims are intended to reduce the economic and human cost. However, a rise in infections since October has forced local authorities to impose quarantines and other restrictions residents feel are too extreme.
Asked to defend Beijing’s antivirus strategy, a spokesperson for the Chinese Foreign Ministry said that law protected the public’s legal rights.
The government is trying to “provide maximum protection to people’s lives and health while minimizing the COVID impact on social and economic development,” Zhao Lijian said.
China, a founding IMF member, has a prestigious single seat on the the organization’s 24-member executive board, unlike most countries that must share a seat. Its 6% voting share is second only to the United States and Japan.
While China’s policies have a ripple effect across the globe, Georgieva stated that the greatest threat to the global economy is high inflation. This means central banks need to raise interest rates, making credit more costly for consumers and businesses. This is coupled with the need for governments not to undermine central bank efforts by excessive spending but to care for the most vulnerable.
“Policymakers are faced with a very difficult time in the year ahead,” she said. “They must be disciplined in fighting against inflation. Why? Because inflation undermines the foundation for growth, and it hurts the poor people the most.”
Asked if the U.S. Federal Reserve should pause interest rate increases that are strengthening the dollar and putting pressure on poorer countries, Georgieva said that “the Fed has no option but to stay the course” until inflation credibly declines.
” They owe the U.S. economy, but they owe the world economy. Because what happens in the United States if the inflation is not under control can have spillover effects for the rest of world,” said the chief of the Bulgarian IMF.
Inflation data is still too high in the U.S. and Europe and “the data at this point says: too early to step back,” Georgieva said.
She warned of the dangers of international tensions between China and the West, and between Russia and China, which could limit trade and reduce its positive effect on economic growth. She said that although there are concerns about supply chain disruptions due to the pandemic, she warned that “we must work harder to find a way to counter these protective instincts” while being open about supply concerns.
Georgieva said the world was already seeing signs of increased hunger before Russia’s invasion of Ukraine disrupted grain supplies to Africa and the Middle East. She said that more investment in resilient agriculture, support for small farmers, and efforts to reduce food waste are part of the solution.
” We have to admit that even the wealthiest families and societies are wasting food every day, even if they have enough to feed the entire world. “Hunger is the most important problem in the world.”
But hunger has been on the rise in recent years. Georgieva stated that the world needs to focus on food security in a holistic way that reduces waste, improves productivity, and, most importantly, places more emphasis on small-scale agriculture, which is where a lot of people live, especially in developing countries. “This would help bring an end to this problem.”
Russia’s war also created an energy crisis after Moscow cut off most natural gas supplies to Europe as Western allies supported war-torn Ukraine. High energy prices have created an opportunity for green investments to “accelerate transition to low-carbon energy supplies”, which has led to high energy prices.
This story was first published on Nov. 29, 2022. It was updated on Nov. 2022, in order to correct the fact that the International Monetary Fund predicted that China’s economy would grow at the same rate as the global economy, and not below it.
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