China is Reopening – What does that mean for you?

It is now almost three years since lockdown started in the UK. As most of our readers will know, while the UK and the vast majority of other countries have gradually realised that they will have to live with Covid, China pursued a rigorous – at times brutal – ‘zero Covid’ policy.

This came at some considerable expense to the Chinese economy. November brought a spike in Covid infections and a wave of lockdowns across China. Protests quickly followed, including one at the iPhone factory in Zhengzhou, which has led to Apple re-thinking its reliance on China.

Similar lockdowns were seen in other major cities across China, but despite this, Beijing seemed determined to continue with the ‘zero Covid’ policy.

By December, it was being reported that Chinese people’s trust in the labour market, their own economic prospects and their interest in buying a home had all fallen to record low levels. China’s Shanghai Composite Index fell 15% in 2022.

…And then suddenly it all changed. On December 7th the BBC reported that China was ‘rolling back’ its Covid restrictions after the protests, with one Chinese official apparently admitting that 80-90% of the population might end up with Covid. People who had Covid – but only mild symptoms – were told to return to offices and factories.

China has now re-opened its borders to visitors – for the first time since March 2020 – who will no longer be required to quarantine. The Chinese New Year is on Sunday January 22nd – clearly there must be an increased risk of Covid infections from the associated travel.

The BBC has suggested that 2bn trips could be made now that China has re-opened. With one anecdotal report suggesting that 37m Chinese people had been infected with Covid in a single day, the potential for another global outbreak is very clear.

But what else does China’s re-opening mean? How, for example, will it affect your gas and electricity bills?

The re-opening will mean that China needs more power. It has significantly increased its production of coal, but it will also be a big buyer of Russian oil and gas. As many readers will know, Europe and the G7 countries have imposed a price cap on Russian energy. But Europe remains a significant importer of Russian oil and, with OPEC saying it will not increase production, the price cap – and eventually our own energy bills – may come under severe pressure.

Let us end back with the Chinese New Year – and a note on the zodiac. 2023 in the Chinese calendar will be the year of the water rabbit. The rabbit is, apparently, a sign of longevity, peace and prosperity.

We can only hope so…