China’s move to ease Covid travel restrictions lifts hopes for global economy | Chinese economy

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China’s decision to ease immigration restrictions in the world’s second-largest economy could soften the blow of higher interest rates in global stock markets and unblock supply chains amid a bleak outlook for 2023. It gave investors hope that they could.

Chinese officials said late Monday that travelers entering the country will no longer have to quarantine on arrival after January 8. The announcement marks the reopening of the country, home to vital global supply chains and 1.4 billion people. It was the latest in a series of steps to

Analysts at US investment bank Goldman Sachs said the overall impact on China’s economy has been devastating, despite the strain on China’s health care system as the number of coronavirus cases soars. I think it will be a plus.

China’s measures to free up people’s movement and domestic travel back up investment bank projections of GDP growth of over 5% in 2023, outperforming some Wall Street competitors I’m here.

“While we view the new guidelines as a major step towards a full reopening, we should be aware of the increasing challenges to China’s healthcare system in the near future,” the bank said in a research note released on Tuesday. said.

Shanghai airports, casinos in Macau and domestic and international Chinese airlines are likely to benefit from increased travel as restrictions are lifted, the company said. Local economies such as Thailand, which also play an important role in global supply chains, could be winners from Chinese business travelers and tourists.

Data from Chinese travel platform Ctrip showed searches for popular cross-border destinations surged 10-fold within 30 minutes of the announcement of the quarantine news on Monday night.

A delivery man sorts parcels at a JD Express station in Beijing, China. Photo: China News Service/Getty Images

The recent easing comes after the Chinese government signaled in recent weeks that it would roll out stricter measures on quarantines, testing and travel. The lockdown has wreaked havoc on his global supply chain, causing major delays in shipments of products ranging from iPhones to cars.

The administration’s previous statements on reopening plans had already improved the prospects of some of the world’s leading fund managers, according to a Bank of America (BofA) study.

Expectations for higher growth in China jumped to about three-quarters from just 13% in November. The proportion expecting the global economy to weaken fell slightly to 69% from 73% in November.

“The easing of recession expectations is likely due to improved growth prospects in China,” BofA said.

The pace of lifting restrictions in China is picking up as the UK stock market is poised to reopen on Wednesday after being closed for the Christmas holidays.

US stock indices slumped Tuesday in the midst of the year-end shopping season, dashing hopes of a year-end rally. In China, the Shanghai Stock Exchange rose 1% for him, while the CSI 300 index, composed of his 300 largest companies listed in China’s main financial centers Shanghai and Shenzhen, rose 1.15% for him. rose.

Investors are likely to cling to any improvement in the outlook for the end of 2022 after a sluggish year for global financial markets.

That said, analysts at financial consultancy Capital Economics say the outlook for riskier assets such as developed-market stocks may still be too optimistic.

“Investors increasingly seem to agree with our view on inflation over the past few months, which means we’re going to see a very sharp decline next year in the U.S., and a sharp decline elsewhere,” Thomas Matthews wrote in a note to clients. It will go down a little bit more slowly,” he said.

This means that the US Federal Reserve and several other major central banks are expected to scale back their rate hike plans.

“However, unlike us, investors still seem to expect growth to be achieved without much of a slowdown,” he added.

U.S. credit spreads, a measure of the risk of borrowing in the market, suggest investors expect relatively strong earnings from U.S. companies next year. A series of company analyst reports in developed markets still show that some major economies may escape recession.

But investment banks, including Capital Economics and JP Morgan, believe the measures represent an overly positive stance and that a recession will hit the U.S. in 2023 and 2024, Goldman Sachs said. does not agree.

In a note to clients dated Dec. 26, the company said, “The most unconsensus forecast for 2023 is our call for the United States to avoid a recession and instead continue moving forward towards a soft landing.” .

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