China’s continuation with its zero-tolerance approach against the coronavirus will deepen consumption woes and supply chain risks, as well as set back the nation’s efforts to deleverage and rebalance its economy, according to a report.

Even though authorities are making efforts to fine-tune containment policies, shifting from massive lockdowns to more targeted, small-scale closures in big cities, the country is still unlikely to pivot away from a very low tolerance for virus cases for the rest of 2022, according to US-based consultancy firm Eurasia Group.

“Chinese policymakers face a risk that if they really do relax the policies significantly, there could be a major explosion in cases,” said Michael Hirson, practice head of China and Northeast Asia at Eurasia Group.