{"id":12120,"date":"2022-12-15T15:07:51","date_gmt":"2022-12-15T15:07:51","guid":{"rendered":"https:\/\/zacksim.com\/blog\/?p=12120"},"modified":"2022-12-15T15:09:36","modified_gmt":"2022-12-15T15:09:36","slug":"china-is-reopening-after-pandemic-what-does-this-mean-for-the-markets","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/china-is-reopening-after-pandemic-what-does-this-mean-for-the-markets\/","title":{"rendered":"China is Reopening After Pandemic: What Does This Mean for the Markets?"},"content":{"rendered":"\n<p><em>Todd C. from Alexandria, VA asks: <\/em>Hello Mitch, I\u2019m wondering about the economic effects of China reopening. Reopening quickly seems to cause problems, supply chain, inflation, and otherwise. I\u2019m also wondering about the price of oil. Thanks for taking the time to respond.<\/p>\n\n\n\n<p><strong>Mitch\u2019s Response:<\/strong><\/p>\n\n\n\n<p>Thank you for your email and happy to take the time to respond!<\/p>\n\n\n\n<p>China\u2019s zero-Covid experiment appears to be concluding, and after years of heavy-handed restrictions and rolling lockdowns that sometimes, confined millions to their homes for months at a time. China\u2019s policies resulted in lower cases and deaths than other countries, but came at quite an economic cost. 2022 GDP growth is expected to come in at 3.3%, which is significantly lower than the 5.5% official target for the year.<sup>1<\/sup><\/p>\n\n\n\n<p>The economic pain has been acute as of late. China\u2019s exports have fallen for two consecutive months, with shipments plummeting -8.7% in November. Imports also fell by double digits in November, marketing the weakest month since the onset of the pandemic. Youth unemployment stands above 20%.<\/p>\n\n\n\n<p>_____________________________________________________________________________<\/p>\n\n\n\n<p><strong><u><a href=\"https:\/\/go.steadyinvestor.com\/arrow-volatility-guide?source=website&amp;medium=blog&amp;term=mitchsmailbox_blog_2022_12_14&amp;content=volatility_guide\">How to Manage Your Investments During Significant Market Changes!<\/a><\/u><\/strong><\/p>\n\n\n\n<p>When investors are faced with market changes, such as volatility, they tend to chase negative headlines. <em><\/em><\/p>\n\n\n\n<p>The real challenge is not in finding a way to eliminate volatility\u2014it is developing a mental approach to dealing with it. Our guide, \u201cHelping You Manage Market Volatility,\u201d will provide you with insights and tips to do just that. Get answers to questions like:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><em>Market downturns can and will occur, but what should you do?<\/em><\/li>\n\n\n\n<li><em>How can diversification help you manage volatility without compromising your returns?<\/em><\/li>\n\n\n\n<li><em>When volatility is too much for you to handle, how can a money manager help?<\/em><\/li>\n\n\n\n<li><em>Can volatility be an opportunity?<\/em><\/li>\n<\/ul>\n\n\n\n<p>If you have $500,000 or more to invest and want to get answers to the questions above, click on the link below to download this guide today!<br>\u00a0<br><strong><u><a href=\"https:\/\/go.steadyinvestor.com\/arrow-volatility-guide?source=website&amp;medium=blog&amp;term=mitchsmailbox_blog_2022_12_14&amp;content=volatility_guide\">Download Zacks Volatility Guide, \u201cHelping You Manage Market Volatility.\u201d<sup>2<\/sup><\/a><\/u><\/strong><\/p>\n\n\n\n<p>_____________________________________________________________________________<\/p>\n\n\n\n<p>Frustration among citizens led to mass protests, and reportedly a letter from Foxconn\u2019s CEO Terry Gou urging the government to adjust the zero-Covid policy. In response, China is now scrapping rules for mass testing, ending mandatory hospitalization for people who test positive, and reconfiguring how lockdowns are imposed, among other changes.<\/p>\n\n\n\n<p>This reopening has filtered through as a short-term positive for China\u2019s markets \u2013 the renminbi currency has posted its strongest five-month gain against the dollar since 1994, and Chinese stocks have bounced approximately 10%.<\/p>\n\n\n\n<p>One of the lessons we\u2019ve taken away from these Covid-19 years is that it is easy to shut down an economy and impose restrictions, but it\u2019s not as easy to reopen and quickly achieve a balance between supply and demand. In the case of the U.S., consumers were armed with stimulus checks and demand surged back, but rolling shutdowns across the world and a shift in spending from services to goods upended supply chains. Shortages and eventually, inflation, followed.<\/p>\n\n\n\n<p>I think the China reopening story could be different. For one, China has not sent out stimulus checks or increased fiscal stimulus much at all over the past year, so households are not armed with excess savings they\u2019re ready to take out to the stores, which means a goods supply shortage isn\u2019t likely. On the services side, a high youth unemployment rate should mitigate the labor shortages we experienced in the U.S.<\/p>\n\n\n\n<p>There is also the simple fact that China is not likely to reopen as swiftly as the rest of the world did. The state still has broad authority to establish rules and restrictions, and rising cases and hospitalizations heading into the winter may mean this reopening will be more cautious than full-fledged.<\/p>\n\n\n\n<p>Finally, China is reopening to a world where demand is slowing and financial conditions are being tightened by global central banks, which may neutralize the potential impact on oil and other commodity prices. I would expect to see a bit more upward pressure on oil as transportation demand and factories operating at full capacity return to China, but I do not think the global economy is at a point in the cycle where price pressures will mount quickly.<\/p>\n\n\n\n<p>So, in the meantime, let us help guide you through these market changes with our guide, <em><strong><a href=\"https:\/\/go.steadyinvestor.com\/arrow-volatility-guide?source=website&amp;medium=blog&amp;term=mitchsmailbox_blog_2022_12_14&amp;content=volatility_guide\">Helping You Manage Market Volatility<\/a><\/strong>.<sup>3<\/sup> This guide<\/em> will provide you with insights and tips to do just that. Get answers to questions like:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><em>Market downturns can and will occur, but what should you do?<\/em><\/li>\n\n\n\n<li><em>How can diversification help you manage volatility without compromising your returns?<\/em><\/li>\n\n\n\n<li><em>When volatility is too much for you to handle, how can a money manager help?<\/em><\/li>\n\n\n\n<li><em>Can volatility actually be an opportunity?<\/em><\/li>\n<\/ul>\n\n\n\n<p>If you have $500,000 or more to invest and want to get answers to the questions above, click on the link below to download this guide today!<\/p>\n","protected":false},"excerpt":{"rendered":"<p>This week Mitch takes a look at the economic effects of China reopening<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[66,71],"tags":[],"class_list":["post-12120","post","type-post","status-publish","format-standard","hentry","category-mitchs-mailbox","category-private-client-group"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/12120","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=12120"}],"version-history":[{"count":5,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/12120\/revisions"}],"predecessor-version":[{"id":12125,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/12120\/revisions\/12125"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=12120"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=12120"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=12120"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}