Will China drop zero-Covid? - with Adam Wolfe

In this episode, Paul Diggle talks to abrdn’s Senior Emerging Market Economist Robert Gilhooly and Absolute Strategy Research’s EM economist Adam Wolfe about the outlook for China. They discuss zero Covid, the 20th Party Congress, and President Xi’s policy agenda.

 The key takeaways are:

 ·         Chinese growth is rebounding out of the Shanghai lockdown, but this recovery may not prove particularly durable while zero-Covid remains in place. Already, there are renewed outbreaks requiring restrictions in parts of the country.

·         As a baseline expectation, China is likely to roll back zero Covid gradually after the 20th Party Congress in Q4. However, the rollout of mRNA vaccines or Omicron-specific vaccines may delay this timetable.

·         Fiscal and monetary policy are being used to support the economy, but will struggle to gain traction. Stimulus measures may just be pulling forward growth from the future.

·         President Xi is almost certain to secure a 3rd term at the 20th Congress, and continue to consolidate power around himself. The composition of the Politburo may hold clues about his desire for a 4th term and beyond, or whether a successor is being prepared.

·         Chinese policy is gradually playing down the supremacy of growth targets, instead pivoting to resilience and national security considerations.