Blackrock says downside risk to China’s economic growth have risen
The latest from BlackRock on China and the outlook and implications of its zero-COVID policy:
- The key question is how China’s zero-COVID policy will stand up against Omicron. The policy so far has proven effective and enjoyed popular support, but has left China with almost no natural immunity. We expect the country to maintain the policy – at least optically – in this politically important year. This raises the spectre of more restrictions on activity, from targeted measures that keep the economy humming (Shanghai) to full-scale lockdowns (Xi’an). As a result, we believe downside risks to China’s growth have risen, even as Beijing appears bent on achieving its growth target this year by loosening policy.
- The big picture on Omicron remains that we see it only delay the powerful global restart. Less growth now means more growth later, in our view. Omicron also may have a silver lining. Its highly infectious nature may turn COVID into an endemic disease similar to the flu as populations build up immunity and annual booster shots keep down the human toll.