China risks collapsing the global economy as its zero Covid strategy crumbles Business

There are a variety of theories as to why. The most plausible explanation is that vaccines, especially mRNA-based ones, were perceived to have side effects and the risks weren’t worth taking if authorities kept their word to hold the virus. from a distance.

In a tragic reversal of what has happened in much of the rest of the world, this means young and healthy people are more likely to be vaccinated than older people.

Authorities are trying to make up for lost time, but are now chasing a wave of infections rather than making it through.

Most other countries, including New Zealand, which imposed severe travel restrictions for much of the pandemic, have now accepted that Covid is rampant and we must learn to live with it.

In mainland China, the eradication of Covid is still government policy. To backtrack and launch a campaign to get more of the population vaccinated would be to admit a catastrophic mistake.

It seems that after unleashing this virus on the world, China’s stubborn and increasingly condemned zero Covid policy will ensure that the damage caused by the pandemic could linger for months.

In a worrying echo of the early days of the pandemic, supply bottlenecks are already beginning to appear with the number of container ships waiting off some of China’s biggest ports nearly doubling from February. , according to data from Bloomberg. And all this before taking into account the possibility of sanctions being imposed on China if Beijing were to respond to Moscow’s requests for financial and military assistance.

Will this further boost inflation or retard growth? We already know the answer from the start of the pandemic: both. The string on which central bankers balanced became a common thread. So how should they proceed?

Well, as the old jokes say, I wouldn’t start from here.

With inflation hitting 8%, unemployment below 4%, rates at zero, and quantitative easing just ending, US monetary policy is, as Russell Silberston of fund manager Ninety One puts it, ” quite the wrong place” – hence why Jerome Powell appeared so eager to play catch-up last night. The Bank of England has moved a little more in the right direction but not much.

The US labor market has been tight for some time, but it is also tightening in the UK.

Unemployment is near the pre-pandemic rate of 3.8% and job vacancies are at a new high. This will likely fuel the Bank’s fears that inflation is feeding on rising wages and things could soon start to spiral out of control.