- OECD's Secretary-General sees China's reopening as positive for global inflation fight.
- Short-term challenges such as increased infections are expected but long-term benefits in supply chain and trade are seen.
- China's reopening is seen as positive for the global economy.
On Monday, Mathias Cormann, Secretary-General of the Organization for Economic Cooperation and Development (OECD) said that China's reopening is "overwhelmingly positive" in the global fight against surging inflation. He made these remarks while speaking with CNBC's Joumanna Bercetche at the World Economic Forum in Davos, Switzerland.
Cormann stated, "We certainly very much welcome the easing of Covid related restrictions in China." However, he acknowledged that there will be short-term challenges, such as heightened levels of infection which are likely to have some short-term impacts. But in the medium to longer term, he sees this as a positive step in ensuring that supply chains function more efficiently and effectively, and that demand in China, as well as trade more generally, resumes in a more positive pattern.
China abruptly ended most Covid controls in early December, which led to a surge in infections among the population of 1.4 billion. Beijing reported on Saturday that almost 60,000 people with Covid had died in hospital since the country dropped its strict Covid restrictions last month, a sharp increase from previous figures.
Despite the recent surge in Covid cases in China, economists have cited China's reopening, alongside a flurry of positive data surprises, as a reason to upgrade their previously gloomy forecasts. Cormann also highlighted that one of the factors contributing to inflation is the disruption of global supply chains, and China's return to the market will help alleviate this issue. He said, "One of the drivers of inflation was very much the supply shock related to global supply not being able to keep up with global demand … as swiftly as was required. And so, China coming back into the global market in earnest and supply chains functioning more efficiently will help bring inflation down. Clearly, this is overwhelmingly positive."