China’s reopening could bring opportunities in addition to risks to its economy, Albert Park, chief economist on the Asian Development Bank told CNBC.
Although the lifting of Covid restrictions in China would boost growth prospects for the country and other economies, it could also result in a rise in Covid-19 cases, he said Wednesday.
“The one area where there could be upside risk can be China’s reopening. And in fact, there’s each downside and upside risks for the China case because as they reopen, we all know cases are going to need to spread pretty quickly,” Park said.
There could possibly be “waves in several parts of the country at different times,” Park said. “And there will be a robust temptation by the federal government to reimpose controls or step back. That could possibly be very disruptive for economic activity.”
Recurring lockdowns in China is one in all the three big headwinds which can be slowing down the region’s recovery from the pandemic, in response to the Asian Development Bank.
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But that’s the worth the federal government would need to pay if it wants the country to open up and transition back to life without the zero-Covid policy, he added.
This week, ADB downgraded its 2022 growth forecast for China to three% from its previous projection of three.3%. It also predicted China’s economy would grow by 4.3% in 2023, downgrading its September growth estimates of 4.5%.
The event bank has also trimmed its growth forecast for developing Asia and the Pacific to 4.2% from September estimates of 4.3%, and cut its 2023 outlook for the region to 4.6% from 4.9%.
Recurring lockdowns in China is one in all the three big headwinds which can be slowing down the region’s recovery from the pandemic, in response to ADB. Monetary policy tightening by central banks all over the world and the prolonged Russia-Ukraine war are aspects contributing to slower growth as well, the bank said.
“The earlier China can get there … the earlier they’ll get an actual recovery in demand and truly boost growth prospects” for itself and other economies within the region, Park added.
Boost to Hong Kong’s reopening
China’s reopening can be good for Hong Kong as tourist arrivals will likely increase, said Allan Zeman, chairman of the Lan Kwai Fong Group, an actual estate owner and developer in Hong Kong’s clubbing district.
“China is the large kahuna and it’s really essential that they’re opening up … It is time that they get back to work again,” Zeman told CNBC on Wednesday.
His comments got here a day after Hong Kong further eased travel and mobility measures.
Restrictions on Hong Kong travelers visiting bars or dining in at restaurants have been scrapped, and folks in town aren’t any longer required to make use of the Covid contact tracing app, LeaveHomeSafe.
Nonetheless, they can not completely abandon the app just yet as certain establishments should require them to indicate proof of vaccination.
It has been surprising how quickly businesses in Hong Kong have bounced back, and those who left Hong Kong resulting from its stringent measures prior to now are able to return as well, claimed Zeman.
“They have been so pleased with the results of yesterday and lots of are planning their trips back,” he said, referring to individuals who do business in Hong Kong.
With regard to tourism, China’s reopening will speed up Hong Kong’s recovery to “bring us back to the old days again,” in response to Zeman.
“No tourists were coming in order that tourist dollar was really, really lacking. But I believe going forward now, with tourists I’m expecting an enormous bounce and tourism coming back again.”
Residents in Hong Kong have also taken advantage of easing measures to travel abroad.
Hong Kong’s flag carrier Cathay Pacific reported on Tuesday that it carried almost 530,000 passengers in November. This was a 652.1% increase compared with the identical time last yr, but a 79.9% drop from pre-pandemic levels in November 2019.
“We continued so as to add more flights to more destinations last month, specifically to and from popular places in Japan in addition to Southeast Asia, which saw huge demand from Hong Kong,” Cathay Pacific’s Chief Customer and Business Officer Ronald Lam said in a press release.
Although Hong Kong and China’s recovery looks to be on the horizon, Zeman warned that opening up could possibly be “one step forward, then three back, then two steps forward again.”
