Delta wave may have peaked but it won’t be the last

Aggressive containment measures, mass testing and quarantine appear already to be bringing China’s Delta outbreak under control. The economic cost should be fleeting – but it will be felt beyond China’s shores due to the closure of another major port terminal. And it won’t be the last bout of disruption. Meanwhile, the People’s Bank is likely to deliver a policy signal early next week in the form of an MLF operation.
Mark Williams Chief Asia Economist
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China Data Response

China Official PMIs (Nov.)

The official PMIs suggest that industrial activity rebounded this month thanks to easing disruptions from power shortages while a renewed virus flare-up held back the recovery in services. And while we know little about its transmissibility and severity, the new Omicron variant could hold back a further economic recovery. On a more positive note, the surveys point to easing price pressures.

30 November 2021

China Chart Book

Omicron tests China’s zero-COVID strategy

The global spread of a more transmissible COVID variant is a particular challenge for a country trying to remain COVID-free. But after nearly two years of success suppressing infections domestically, the bar to changing course before better medical treatments or vaccines are available is high. A study published last week by the Chinese Center for Disease Control and Prevention estimated that if China were to adopt the pandemic control measures recently in place in several Western countries, it would soon be facing several hundred thousand new cases per day and 10-20,000 severe cases. These estimates were deliberately conservative, made on the assumption that natural and vaccine-derived immunity is as high in China as in the comparator countries. The actual health cost, the authors argue, would almost certainly be higher. Given these concerns, if Omicron proves harder to contain than Delta, we would expect officials to tighten containment measures in response. Economically, that would lead to further intermittent disruption to domestic activity, particularly services, and to global supply chains.

29 November 2021

China Economics Weekly

Capacity constraints put a ceiling on export outlook

In the long-run, the global spread of highly-transmissible coronavirus strains may make China’s zero-COVID stance untenable but the immediate response to concerns about B.1.1.529  is more likely to be a doubling down on the strategy, with rolling local lockdowns in response to any local cases and continued tight border controls. China’s exporters could benefit from another wave of lockdown-induced demand elsewhere in the world. But capacity limits, particularly at ports, potentially exacerbated by further port shutdowns, may limit their ability to meet orders.

26 November 2021

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China Data Response

China Inflation / Trade (Jul.)

Rising factory gate prices for electronics products signal that supply chains are still tight but, with both semiconductor imports to China and China’s exports of electronics rising over the past couple of months, constraints appear to have eased somewhat.

9 August 2021

China Economics Weekly

Delta disruption spreads as vaccine exports soar

Escalating efforts to contain China’s first Delta variant outbreak will hurt some sectors of the economy. But if they are as successful as they have been in the past, the overall damage will be fleeting and small. Meanwhile, a rise in infections classed as critical in China over recent days raises questions over whether China’s vaccines are as effective at reducing severity of infection from the Delta variant as several studies have shown they are against the regular variety. That matters beyond China’s borders: the government this week said that China is now exporting 200bn vaccine doses per month and that this pace will increase over the rest of the year.

6 August 2021

China Economics Weekly

Delta putting zero-COVID approach under strain

China’s ability to quash COVID flare-ups is being tested again:  the Delta variant outbreak that was identified in Nanjing last week has already spread further within China than any since the first that emerged from Wuhan. But the bigger challenge it poses is to China’s long-term strategy of keeping COVID infections as close to zero as possible.

30 July 2021
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