You may have considered China’s greatest threat to be the United States, but in fact, as in all command economies, the greatest threat to China is itself. The country’s authoritarian lockdown response to COVID outbreaks is strangling its economy, and with it, the world’s. The Wall Street Journal reports:
The world’s factory floor is exporting new signs of economic pain. Lockdowns aimed at stamping out Covid-19 are throttling activity in China, the WSJ’s Jason Douglas and David Harrison report, triggering fading overseas demand for the country’s exports as economies wrestle with surging prices and rising interest rates. The effects of China’s slowdown are showing up from German factories to Australian tourist spots, and exports across Asia are weakening as China’s neighbors watch their biggest market sag. China’s deceleration represents a double-whammy for the global economy. The country is a huge market for goods, components and raw materials and is the manufacturing dynamo at the center of global trade. That’s bad news for commodity exporters such as Brazil, Chile or Australia that supply China with oil, copper and iron ore. It also hits manufacturing powerhouses that rely on China as a huge market for machinery, cars and semiconductors.
Hapag-Lloyd says its container volumes out of Shanghai have fallen by half during the Covid lockdowns. (ShippingWatch)
Action Line: China is rolling out its strict lockdowns at what is possibly the worst time possible for the global economy. There’s already market chaos. You need to prepare. If you need help, talk to me.
E.J. Smith - Your Survival Guy
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