China’s reopened borders to revitalize world’s second largest economy

China has dismantled the final pillar of its zero-Covid policy that has isolated the country and weighed on its economic growth, preparing the world’s second-largest economy for a rebound after three years of border closures.

There is still no sign that the country’s trade flows have been hit by a resurgence of Covid infections and easing border restrictions in December, according to a report by the Germany-based Kiel Institute for the World Economy.

“China’s economy could get a positive boost in the coming months from the lifting of the zero-Covid policy,” Vincent Stamer, head of the Kiel Trade Indicator, said in the report.

Over the past month, China has begun gradually easing some of the world’s toughest Covid-19 rules. These included frequent PCR tests, restrictions on movement and lockdowns, which severely damaged the economy. The reopening is expected to revitalize an economy that has suffered the lowest growth in nearly half a century.

In December, the World Bank said it expected China’s economy to grow 2.7 percent in 2022, before recovering to 4.3 percent in 2023 as the economy reopens. based lender.

China’s growth prospects face “significant risks” stemming from the uncertain trajectory of the pandemic, policy developments in response to the Covid-19 situation and household and corporate responses, the World Bank said.

In addition, “continued stress” in the real estate sector could have greater macroeconomic and financial implications while risks related to climate change mount, it said.

External risks to China’s growth prospects include highly uncertain global growth prospects, a more than expected tightening of financial conditions and heightened geopolitical tensions, according to the World Bank report.

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In December, China’s exports fell 2.4 percent mom, which is “within normal fluctuations” and implies stagnation for the fourth quarter overall, while imports rose 4.8 percent, according to the Kiel Trade Indicator data showed.

Global trade stabilized in December towards the end of 2022, particularly for the EU and Germany, despite ongoing fears of an economic recession, the report said.

World trade showed more activity in December, growing 0.9 percent mom, led by growth in Europe, the data showed.

“Overall, world trade is stabilizing, which is a good sign given the ongoing fears of recession,” said Stamer.

In the EU, exports increased by 2.7 percent in December and imports by 2.6 percent compared to the previous month, the report said. In Germany, exports increased by 2.3 percent, while imports fell by 1.5 percent over the same period.

“Despite adverse circumstances, German foreign trade can look back on a successful year 2022. Neither the delivery bottlenecks nor Russia’s war of aggression have led to any decisive slumps,” says Stamer.

“If the global economy has overcome its weak phase in 2023, this should also give German foreign trade an additional boost.”

The US saw exports rise 1.5 percent and imports fall 4.7 percent compared to November.

Russia’s trade remained under pressure in December, with both exports and imports falling by 2.5% and 4.4% respectively.

While global trade stabilized, the number of containers shipped fell significantly as a result of a weak global economy, the report said.

Since the beginning of 2022, the volume of traded containers has fallen from more than 14 million to currently around 13 million containers, it said.
Source: The National News

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