China’s lockdowns are a greater threat to inflation today than in 2020, Bernstein says

BEIJING — China's latest Covid lockdowns are a greater risk for global inflation today than they were in 2020, Bernstein analysts said.

That's because the world has become more reliant on Chinese goods since the pandemic began, the analysts said in an April 8 note.

China's share of exports globally rose to 15.4% in 2021, the highest since at least 2012.

China's exports have surged in the last two years as the country was able to control the initial Covid outbreak within weeks and resume production, while the rest of the world struggled to contain the virus. China has maintained its zero-Covid policy, while other countries have relaxed controls in the last year.

Over the last several weeks, mainland China has tackled its worst Covid wave in two years with lockdowns and travel restrictions that foreign business leaders have described as tougher than in early 2020. The stay-home orders and virus testing requirements have particularly affected coastal economic centers like Shanghai.

"We believe, the macro impact of China lockdowns could be quite high and something which the market is not yet pricing in," Bernstein's Jay Huang and a team said in a report.

Keywaylock
03/05/2022
258 Views