2. They may have had more information in March 2020 but at this point it's unlikely they know more than us given we've had 2 years of experience dealing with millions of infections while they were set on zero-COVID policy.
3. Torturing your own people seems like a pretty passive aggressive way to destroy the USD.

img source from March HK vs NZ

1. China's urban areas are the highest density human populations on the planet. In particular in Guangdong and on the east coast.
2. The SARS epidemic was very traumatic in some pockets. It was like a much shorter but more potent health scare with similar effects. A bit related to the above.
3. China's government is sometimes perceived as uber-efficient and effective in the West. That's only half-true, at very best. It can also be comically ineffective; so much of what bureaucrats do is to satisfy what their superiors seem to demand; so often what is actually required is extremely obtuse. There are communication problems because speech is not free, even at the deep level (what a middle manager can say to a boss; what a local party official can say to a high ranking CCP member). Lack of that flow of information leads to really bad outcomes, often.
4. Xi Jinping is really very authoritarian, and seems from what I can tell to have very rigid ideas about things. Once he had decided what his COVID19 policy was, you can imagine (see 3) how hard it would be to change it. (The CCP, anyway, is all about top-down control, it's like its DNA .. to a hammer everything is a nail; a biological disease in the society is treated like a mind-disease (people having 'wrongthink') - stamped out with extreme prejudice. Unfortunately this is a ridiculously impractical idea, but see the previous point).
5. Don't underestimate how stupid humans are in groups :)

There are several possibilities that I think are worth exploring.

Germ Freaks This virus may genuinely terrify the ruling class atop the CCP.

It’s a psyop The short term hard lockdowns in Wuhan in early 2020 were falsely advertised as an astonishing scientific success, but were most effective as an information operation to shut down the world, while seeding the idea that lockdowns would help to crush the virus.

National Hubris/Believing their own press Every country modeled their lockdowns, a novel concept that did not exist prior to 2020, after the Wuhan lockdown. This level of admiration may have acted to affirm China’s well-known, baked in superiority complex, and convince the Communist Party that it alone has the technocratic authoritarian capacity to wage a successful war on a virus.

Internal politics There remains tremendous infighting in the ranks of the Communist Party. Shanghai is perceived as one of the more “liberal” cities in China, and the lockdowns may have been motivated by competing political factions desperate to win over influence and power.

1. The Shanghai lockdown keeps the idea of virus containment alive.
2. The Shanghai lockdown reassures western trading partners that China is as dumb as they are.
3. The Shanghai lockdown is useful political theatre to the CCP, further binding China’s population to the Party.

A hardline communist like Xi Jinping, who spent time in a forced labor camp as a youth, isn’t about to lose sleep over some bankers in Shanghai missing a few meals. On the contrary, China’s top leaders are more inclined to see the lockdown as character building; a lesson to the rich kids that sacrifice to the Party comes first, and a reminder to the people all across China that they really are all in this together.

China: It's for your health

[Video]