While other countries are trying to assure people about the necessity of restrictions, China's government does not care much about what local people might think. Beijing does what needs to be done to prevent the rapid spread of the new Delta strain. So far, this strategy has brought excellent results.
Currently, China is facing a threat of a new wave of the pandemic. More and more people are infected with the Delta variant. Therefore, in order not to repeat mistakes of the past, the authorities have again imposed tough restrictions. Public transport and taxi services were curtailed. Moreover, China imposed new travel and movement restrictions across the nation. At the same time, mass testing is carried out. Many market experts are concerned about such a turn of events as an economic slowdown in China will inevitably affect the global economy.
According to David Roche, president and global strategist at Independent Strategy, new restrictions may pose a threat to steady economic recovery, making it bumpier. Naturally, the complete cancelation of restrictions in the economically powerful countries will support the revival. Yet, now, China is unable to do so for obvious reasons. Therefore, industries must accept the fact that economic costs will arise not only for Chinese companies but also for firms around the world.
Tough restrictions are still the only and most effective weapon in the fight against the pandemic. Should the epidemiological situation worsen, it will immediately affect the recovery of the Chinese economy. Local markets desperately need to resume work in full. Otherwise, by mid-August or early September, the GDP forecast for 2021 will have to be revised. In addition, a new batch of restrictions in China will disrupt global supply chains. Roche is sure that this could deliver a severe blow to the global economy. The cost of some goods will jump and inflation expectations will rise.
