China could be swamped by a "tsunami" of Covid-19 infections between now and July, according to new research published in the prestigious journal Nature Medicine. The wave of infection would send an estimated 5.1 million people into hospital, 2.7 million into intensive-care units, and kill 1.55 million citizens.

That's according to an assessment by researchers from Fudan University, which appropriately enough is in Shanghai, Ground Zero for China's current outbreak. Such an adverse outcome could be the result of abandoning China's hardline "zero-Covid stance," the scientists conclude. The tsunami would overwhelm China's healthcare system, and create peak demand for intensive-care units at 15.6 times the existing capacity.

Think financial charts are complex? The academics ran an "age-structured stochastic compartmental susceptible-latent-infectious-removed-susceptible model" of the transmission for SARS-CoV-2, as the virus is officially known. So that's double susceptible, phew! They built out the numbers from what's currently going on in Shanghai.

The Fudan research, which you can read here, is a politically correct study. It blames most Chinese infections on foreign travelers coming back home, and starts its discussion by noting Omicron was first discovered in South Africa. The research calls harsh lockdowns a euphemistic "non-pharmaceutical intervention," like surgery. It effectively supports President Xi Jinping's decision to double down on zero-Covid at all costs, whatever the human and economic sacrifice. It also recommends targeting vulnerable individuals to make sure they have access to vaccinations and antiviral therapies.

The Fudan study points out that 91.4% of the Chinese population over the age of three have received the "full primary schedule" of vaccinations, and 53.7% have had a booster shot. The researchers do not directly address the fact that the limited studies conducted overseas on Chinese vaccines found them less effective than mRNA-based jabs. China has refused to import any Covid treatments, for political rather than public-health purposes. The study does concede, though, that the immunity created by the vaccination campaign to date would be inadequate. It predicts 28.2% of intensive-care admissions would be among fully vaccinated people, far higher than the figures in the West. Of those dying, 23.3% would be vaccinated.

So one reason that China would find it so difficult to carry out a live-with-Covid strategy is that its vaccines basically don't work well enough. Plenty of people who may assume they're covered against infection are likely not. "Breakthrough" infections could sweep a nation that is still struggling to get a third shot into the arms of half the population, let alone the fourth shot they likely already need. China's healthcare system is strong in the biggest cities but creaks outside them. Due to a lack of primary-care physicians, the system relies on many citizens heading to hospitals even to treat common ailments, which would be a real problem if the system is getting overwhelmed by serious infections.

China claims to have deployed a "dynamic zero-Covid strategy," which is a zero-Covid strategy made to sound a bit zippy. There's still blanket locking down of neighborhoods or whole cities even based on a handful, and sometimes a solitary, infection. The "dynamic" reference indicates that the lockdowns are a little more targeted, "repeatedly zeroing local transmission," in the language of the report.

But, as Shanghai is experiencing, the lockdowns can sweep up an entire city despite original promises that there would be only a limited, two-stage lockdown of portions of the city at a time. There is also no clear sense of how China will emerge from the lockdown-easing-lockdown cycle if the virus continues to do the rounds; it's not really "zeroing local transmission" if another outbreak then occurs. It's zeroing the official case count, not the spread of the virus.

The World Health Organization has warned that China's zero-Covid approach is wrong - a brazenly outspoken opinion given how much the WHO has attempted to appease China in the past.

"We don't think that it is sustainable considering the behavior of the virus," WHO Director-General Tedros Adhanom Ghebreyesus said at a press briefing on Tuesday in London, adding that the WHO has conveyed that message directly to the Chinese leadership. Given how infectious the Omicron variant is, and how relatively mild, it is more sensible to forge a path to living with the virus, as basically every other nation has decided to do. "I think a shift would be very important," the WHO chief added.

WHO emergencies director Mike Ryan followed up on his boss by saying leaders chasing the elimination of the virus need to consider the impact of zero-Covid on human rights and business. "We need to balance the control measures against the impact on society, the impact they have on the economy, and that's not always an easy calibration," Ryan said.

Across the strait, democratically run Taiwan has changed tack. "We are now moving from zero-Covid to the path of coexisting with the virus," Taiwanese health minister Chen Shih-chung said on Tuesday.

Taiwanese health officials on Wednesday reported 57,216 new Covid cases, a number that is rising fast. As recently as mid-March, the daily tally was in double digits but has jumped exponentially since then. The island has recorded 505,455 confirmed cases since the onset of Covid, but only 951 deaths, with officials saying 99.7% of cases are mild or asymptomatic.

By coincidence, China recorded 500,000 confirmed Covid cases in a seven-week stretch through April 22, the Fudan study notes. Of those, 93% have appeared in Shanghai. The Fudan scientists say that a combination of responses including zero-Covid is likely necessary to prevent the health-care system being overwhelmed. But increasing booster-shot uptake among the elderly and rolling out antiviral treatments for the sick would also mitigate risk a lot.

There is some optimism amid the Covid despair. The case count is lower this week, causing stocks to rise. The CSI 300 index of the largest listings in Shanghai and Shenzhen rose 1.4% today, adding to Tuesday's 1.1% lift.

China sees around 88,000 deaths due to flu each season. The aim would be to bring Covid casualties at least in line with that, rather than seeing millions die.

It is appropriate that a new videogame Trolley Problem, Inc has just come out, to pretty good reviews. Drawing on philosophical quandaries posed down the years, it offers players a series of scenarios in which they must make a sometimes-unappetizing decision.

Countries the world over have been contending with a Covid version of the original "trolley problem," introduced by the virtue-ethics philosopher Philippa Foot in 1967. This considers two scenarios.

A "utilitarian" school of thought says you should flip the switch, and you should push the bystander, killing 1 to save 5. A "deontological" approach might say that it's wrong to deliberately kill someone, whatever the situation.

There are 999,475 people who have died of Covid in the United States. They weren't deliberately pushed onto the tracks, but the immunity that developed as the broader population got vaccinated and infected has led to the current low death rate. The countries that had the worst originally strategies to defend themselves against Covid have been emerging first.

Zero-Covid may save lives. It may also ruin lives, as the economy stalls, Shanghai citizens go stir crazy, and life hits "Pause." It may also only divert the train onto another track where it's going to stall the economy, then kill the same number of people, if not more. It's a deliberately provocative question, and it's clear right now that China is having an almighty struggle coming up with a suitable solution.

At the time of publication, Alex Frew McMillan had no position in the securities mentioned.

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