With rise in COVID, is China heading towards economic turmoil?

New Delhi: The massive COVID surge China is witnessing might leave a deep impact on the country’s economy. The economic news in China in the coming days is likely to get a lot worse. Financial experts say Shanghai, which is the backbone of China’s economic growth will also see financial distress in the coming year. Will Beijing’s recent U-turn in zero-Covid policy help the economy? After China stocks extend gains and Beijing dismantled zero-Covid with the decision to reopen the border in early January, analysts have said local governments may not see a rise in income from taxes or land sales. According to a report in the South China Morning Post, “Aviation, airports, tourism, and hotels that benefited from the reopening theme performed well in early trading on the news,” said Kenny Ng Lai-yin, a strategist at Everbright Sun Hung Kai Securities. “Gains have narrowed, as investors have already had certain expectations for this move.” Meanwhile, COVID will be downgraded as an infectious disease, said National Health Commission in Beijing. After reopening the border, the travellers will only be required to provide a negative test result within 48 hours of arrival. Why 2023 looks increasingly grim for China’s economy? The world’s second-largest economy reported its first decline in exports since the early days of the pandemic in October this year, while factory activity and gate prices also fell. The ultra-wealthy have seen their fortunes shrink, too, with the Hurun China Rich List in November recording its sharpest drop in the number of individuals worth at least five billion yuan ($690 million) since the 1990s. A report in Barron’s said, “The rapid rise in infections has curtailed in-person activity even further, with alternative economic gauges leading to estimate the pace of year-over-year economic contraction deepening to almost 7% in November from 4% in October.” Multiple analysts pointed to slumps abroad as a key factor behind the falling exports, long a major driver of growth for the Chinese economy. “Monetary conditions are tightening quickly in other countries, while inflation continues to stay elevated amidst high energy costs,” Erin Xin, Greater China economist at HSBC, said in a note in November, pointing to a sharp decline in global demand for exports of discretionary items like clothing and electronics. “With global demand slowing, the domestic economy will need to pick up the slack,” he added. Deepening the pain was Beijing’s insistence on maintaining its strict policy of snap lockdowns and travel curbs whenever Covid cases arise – leaving businesses reeling from sudden disruptions and consumers reluctant to spend. Meanwhile, China is the world’s biggest trader and the top market for its Asian neighbours. Weakness in consumer or factory demand can hurt global producers of oil and other raw materials, computer chips and other industrial components, food and consumer goods. With inputs from agencies Read all the Latest News , Trending News ,  Cricket News , Bollywood News , India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.