According to Bernstein analysts, the recent Covid-19 lockdowns in China pose a greater threat to global inflation than the period in 2020. The reason is that the world’s dependence on Chinese goods has increased since the pandemic began.
Analysts noted in the report on the subject that China’s global exports rose to 15.4 percent in the pandemic year 2021, the highest rate since at least 2012.
During the period when the whole world was struggling with increasing cases, production continued in China, which managed to bring the pandemic under control in a short time, and exports had increased in the last 2 years. However, due to the increase in cases in the country in the last few weeks, stricter quarantines and travel restrictions have been reinstated than those applied in 2020. While the restrictions all over the world started to be lifted as of the end of last year, China continues its ‘zero Kovid’ policy. Stay-at-home orders and virus testing obligations are negatively affecting China’s major financial centers such as Shanghai.
“Not yet priced in the markets”
Bernstein analyst Jay Huang said, “The impact of quarantines in China on the macro economy may be very high. This effect is not yet priced in the markets.” Stating that the container costs in Shanghai’s exports increased 5 times compared to the pre-pandemic period, the expert said, “For this reason, we will see an increase in inflation, especially in China’s trading partners.”
China’s export figures for the first quarter showed that stable growth continued.