China
Post Covid Opening to Send Prices on Upward Spiral?
China’s great reopening will
shake the world. For nearly three years China has been closed: hardly anyone
has entered or left it. From January 8th it will reopen its borders, thus
scrapping the last remnant of Xi Jinping’s zero-covid policy. Because the
government has failed to prepare properly by vaccinating the elderly, the
coming months will see widespread infection and death within China. But
eventually something resembling normality will return. The revival of
commercial, intellectual and cultural contact with China should be welcomed.
But its post-covid economic recovery will be hugely disruptive for the global
economy, pushing up the price of oil, gas and other commodities, stoking
inflation and forcing central banks to keep monetary policy tighter for longer.