Rising COVID-19 relaxations in China boosting prices
In a significant development, China has started to ease its stringent zero-COVID policy after nearly three years of strict measures, including city-wide lockdowns and travel restrictions. This shift, driven by rising public dissatisfaction and large-scale protests against the prolonged zero-COVID strategy, is expected to have a positive impact on global businesses.
The European markets responded positively to this news, with the DAX trading 1.4 percent higher at 13,317 points this morning, and the EuroStoxx50 rising 1.6 percent to 3,649 points. This market boost can be attributed to the combination of social media speculation and comments made by the former Chinese chief epidemiologist, Guang Zeng, about the potential easing of China's zero-COVID policy in March.
Guang Zeng's comments have boosted the markets, but Robert Carnell, ING's chief Asia-Pacific economist, expressed caution about the market rally. He believes that the current market rally might not be fully justified by the rumours of China's potential policy change. "The rumour about possible experiments with deviating from China's zero-COVID policy is a rather thin excuse for the rally," Carnell said.
The zero-COVID policy had previously disrupted supply chains and slowed trade and investment flows due to sudden lockdowns of entire cities or communities upon detection of cases. Easing these restrictions may restore smoother logistics, reduce operational uncertainties, and boost manufacturing and export activities in China, which remains a key player in global supply chains.
The opening up to foreign business travelers (especially those vaccinated with Chinese vaccines) should facilitate international business exchanges and foreign direct investment. This could potentially revive economic growth both domestically and internationally after a period of restrained activity caused by the strict virus containment measures.
However, Carnell's cautionary stance serves as a reminder that market movements should be interpreted with a degree of skepticism. The economist's statement does not rule out the possibility of some experiments with China's zero-COVID policy before spring, but it indicates a need for a more substantial reason than just rumours for a significant market movement.
In summary, the easing of zero-COVID signals a positive outlook for global businesses reliant on China’s market and supply networks. However, careful monitoring is advised as China balances reopening with virus control. The latest updates indicate that China is transitioning from its stringent zero-COVID approach towards a strategy more aligned with global norms, promising improved conditions for businesses globally.
- The shift in China's zero-COVID policy could lead to improvements in health-and-wellness, as the easing of restrictions may restore smoother logistics and reduce operational uncertainties, thereby boosting manufacturing and export activities.
- The potential for experiments with China's zero-COVID policy, as suggested by Guang Zeng's comments, could have a significant impact on finance and business, as it could revive economic growth both domestically and internationally.
- The opening up to foreign business travelers could facilitate medical-conditions research and collaborations, as vaccinated travelers from other countries can now visit, potentially leading to advancements in the field of science and health-and-wellness.
