Increasing public protests could be the impetus for a Chinese strategy to live with COVID, according to financial analysts, although the current focus is on the economic impact.

In response to escalating COVID lockdowns and public protests against them in China, Asian stock markets experienced strong declines on Monday, while oil prices continued their recent decline.

Brent crude prices were 3% lower on the day, trading at $81 a barrel, as investors fretted over demand in the world’s second-largest economy and the effect of increasing lockdowns on economic growth.

The Hang Seng Index in Hong Kong fell by more than 4% at the open before closing 1.6% lower.

Despite central bank intervention on Friday aimed at bolstering market liquidity, equity markets across Asia were largely lower, with China’s CSI300 Index falling roughly 2%.

The yuan fell as well

The gloomy feeling spread to Europe at the start of trading, with the commodities-heavy FTSE 100 index declining 0.8%.

Analysts feared that China’s zero-COVID policy, coupled with the protests, could cause greater harm to the economy than was previously projected.

According to a forecast released by the OECD earlier this month, China’s economic growth will decelerate to 3.3% in 2022 from 8.1% in 2021.

Beijing had anticipated a 5.5% growth rate at the beginning of 2022.

Monday marked the seventh consecutive day of record-breaking new COVID-19 cases in China.

In Shanghai, demonstrators and police had battled hours earlier.

Protests also occurred in Wuhan, Chengdu, and portions of the capital Beijing when further pandemic restrictions were implemented to prevent new outbreaks.

Robert Subbaraman, the Asia ex-Japan head economist for Nomura, stated that the Chinese plan to live with coronavirus may have arrived too late.

“The situation is quite fluid,” he remarked. “Protests could be the trigger that leads to a favorable conclusion by causing the government to establish a better game plan for how the country will learn to live with COVID, as well as a more transparent timeframe, so quickening China’s transition to living with COVID.”