China's large-scale testing for COVID-19 may pave the way for a strong economic recovery

May 19, 2020 5:15 PM
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REUTERS/Aly Song

China has launched a massive program that seeks to test as many as 10 million residents of the single city of Wuhan, the epicenter of COVID-19 in China, in an effort to wipe out the coronavirus and reassure a nervous population that they can resume normal activities. If the program is successful, China will have tested as many people in a single city in a short period as the United States had tested cumulatively by mid-May, though some doubt the announced scale of the massive testing is achievable given the city’s limited testing capacity.

Because China’s economic recovery will depend largely on reviving its service sector, its strategy of large-scale testing for COVID-19 can help restore consumer confidence, paving the way for a stronger recovery in private consumption.

The latest data show that China’s industrial output in April saw its first positive year-over-year growth in 2020, but the service sector was recovering more slowly. Widespread testing is critical for avoiding a second wave of infection, which would lead to renewed lockdowns with their associated economic costs. Confidence generated by widespread testing that shows that the number of asymptomatic cases is quite limited is also a precondition for citizens to resume traveling, shopping, dining out, and so forth—all essential for the hard-hit service sector to recover.

Although there are no official national data on the number of tests that have been carried out in China, press reports suggest that China, at least in certain localities, has tested widely and strategically for COVID-19. As of April 15, 3.65 million tests had been administered in Guangdong Province, which has a population of 115 million. In Guangzhou, the capital of the province, all 208,000 students, teachers, and staff were tested just before the third year of middle school, and third year high school students returned to class on April 27. Some school districts in the United States hope that universal student testing will be available by the fall of 2020, but it is far from clear that this goal can be achieved.

Wuhan provides another example of the extent of China’s testing program. The authorities had imposed a stringent lockdown there from January 23 to April 8 and then initiated testing of a random sample of asymptomatic residents to judge the extent to which the disease was still circulating. During April 11–18 the municipal government tested a random sample of 11,423 asymptomatic individuals in 100 neighborhoods in the city’s 13 districts and found only one positive case. Such random testing in the United States has yet to start. Almost all tests in the United States are for symptomatic individuals, front line health and emergency medical services (EMS) personnel, or those who have had direct contact with an infected person.

Then, after 35 days with no new symptomatic cases in Wuhan, on the weekend of May 9–10, authorities there discovered another positive local case, apparently an individual who had exhibited some symptoms as early as March but had somehow escaped testing. The health department immediately tested around 5,000 individuals living in the residential compound where the infected person lived. This testing uncovered five more positive cases.

In response to this finding of a relatively small number of cases, the authorities announced a massive testing program in Wuhan. As noted earlier, the goal is to test around 10 million individuals, including 100 percent of nine key groups including teachers, medical professionals, transportation workers, members of party organizations and administrative units, and people who have come into the city from other locations. Presumably, some of these individuals were tested before May, so once multiple tests of these individuals are taken into account, the tested population will probably fall slightly short of covering the city’s entire population.

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Nicholas R. Lardy Senior Research Staff
Tianlei Huang Research Analysts

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