China’s spending boosts medicine, technology and construction

By Eduardo Baptista

BEIJING (Reuters) – China’s “no virus” policy of constant monitoring, testing and isolation of its citizens to prevent the spread of the coronavirus has shaken much of the country’s economy but has created growth bubbles in the medical, technology and construction sectors.

Analysts say the Chinese government is on track to spend more than $52 billion this year on tests, new medical facilities, monitoring equipment and other measures against COVID, benefiting nearly 3,000 companies.

“In China, companies providing testing services and other related industries are making a lot of money as the government focuses on a containment-based approach to fighting COVID,” said Yanzhong Huang, a global health specialist at the Council on Foreign Relations (CFR). ), an American think tank.

China aspires to have COVID testing facilities within a 15-minute walk of all its citizens in major cities and continues to impose mass testing at the slightest sign of the outbreak.

Hong Kong-based Pacific Securities believes this has created a market of more than $15 billion annually for test manufacturers and suppliers.

Most of the bill is borne by the government, either by purchasing test kits or paying companies to run the tests. Although test prices have fallen since the coronavirus outbreak in early 2020, continued demand has helped a number of companies.

First-quarter profit doubled for Hangzhou-based Dian Diagnostics Group Co Ltd, one of China’s largest medical test manufacturers. Its revenue rose more than 60% to $690 million, just under half of which was from COVID testing services, which were paid out almost entirely by the government.

Shanghai Runda Medical Technology Co Ltd said it was processing 400,000 COVID tests per day in April, during the nearly two-month shutdown of Shanghai, generating more than $30 million per month, according to an article in the government’s Securities Times.

China is defending the “zero COVID” policy as critical to saving lives and preventing its health system from being overwhelmed. There are no signs that it will turn back, even if the economic cost is increasing.

The latest indicators show that the country’s economy has weakened sharply since March as the shutdown measures affected employment, consumer spending, exports and home sales.

Many private sector economists expect the economy to shrink in the April-June quarter from a year earlier, compared to 4.8% growth in the first quarter.

audience monitoring

Dozens of thermal imaging and surveillance camera makers, including Wuhan Guide Infrared Co Ltd and Hangzhou Hikvision Digital Technology Co Ltd, have benefited from the Chinese government’s request for devices to help monitor the health of its 1.4 billion citizens.

Wuhan Guide, one of the world’s leading manufacturers of thermal imaging equipment, doubled its revenue in 2020 by working overtime to supply fever screening cameras throughout China and abroad. Growth stabilized last year, but analysts expect it to rebound again in 2022 and 2023.

Disease was the mother of invention. Since March, Chinese companies and think tanks have filed at least 50 COVID-related patents, according to a Reuters review of international and domestic databases.

The inventions are mostly related to adapting existing surveillance cameras and platforms to track close contacts and identify potential positive cases.

The urgent need for hundreds of new hospitals to alleviate the poor medical infrastructure in China has led some construction companies to thrive.

Beijing-based China Railway Group Ltd, a conglomerate comprising construction, manufacturing and real estate, has built temporary hospitals across China this year, and has been particularly active in areas hard hit by COVID, such as Shanghai.

Its earnings have grown steadily over the past two years, at least in part thanks to COVID-related projects, and analysts expect it to continue to do so for the foreseeable future.

One analyst estimated that about 300 temporary hospitals were built across China during the 35-day period between March and April, when infections soared, at a cost of more than $4 billion.

A third of it is built in and around Shanghai and there is no sign of government demand waning. A Reuters study of tenders for such projects indicates that the government will spend about $15 billion this year on new hospitals.

(Reporting by Eduardo Baptista in Beijing. Editing in Spanish by Javier Lira)

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