Market comment 2022

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After the sudden easing of President Xi Jinping’s “zero Covid” rules, the country is now on course for up to 280 million infections and at least 1 million deaths as the virus rips through the population, according to some predictive models.  In addition to the brutal human toll, the virus risks crippling the world's second largest economy just as it was attempting to reopen. As ports shut down because of sickness, supply chains seize up and millions of consumers panic, the implications are dire - both for China and the West, which buys so many of its goods. After a year in which a Russian invasion that few saw coming tipped the global economy into crisis, could China's Covid disaster prove to be the "black swan" moment of 2023?..

In a sign of the chaos to come, almost 37 million people may have been infected on a single day this week, according to internal government estimates reported by Bloomberg on Friday. The figures said some 248 million people - nearly one-fifth of the population - were likely to have contracted the virus in the first 20 days of December.

Peter Lindström, head of research at Norwegian shipping company Torvald Klaveness, on Wednesday tweeted that 90pc of the Chinese agents used by his firm were unwell, including those in Beijing, Tianjin, Shanghai, Ningbo, Guangzhou and other cities. He claimed the spread of Covid in China was “out of control”.

How Xi’s Covid catastrophe put the global economy at risk