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Really Bad Timing

COVID cases are climbing rapidly in mainland China, with several cities facing severe outbreaks and already imposing restrictions on citizens’ movement, most notably including a city-wide lockdown in the southern metropolis of Shenzhen, involving over 17 million people. The state of this current Omicron outbreak is now the most significant factor impacting China’s economy, given that Beijing has not changed tactics from its “dynamic clearing” suppression policies to limit the spread of the virus.

The timing is highly unfortunate for Beijing given the need for improving household consumption, property sales, and factory output in the coming months. Q1 expectations for economic data should be downgraded, and if cases do not start falling by the end of March, downgrades should follow for Q2 and the full year.

Posted March 13, 2022
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