China is on the cusp of reopening after three years of Covid. But is the world ready?

Easing restrictions will allow producers in China to ramp up operations, just as the world tries to return production output to pre-pandemic levels
But reopening will also mean an increase in overseas Chinese tourists, which could potentially trigger a surge in coronavirus cases

Joseph Sipalan

Published: 9:00am, 23 Dec 2022

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China’s progressive easing of its uncompromising zero-Covid strategy has triggered equal parts optimism and anxiety, as international markets weigh the re-entry of the world’s second-largest economy at a time when nations remain wary of a possible global recession due to surging commodity prices and red-hot inflation over the past year.

Two weeks ago, China’s powerful State Council softened its stance on managing the pandemic, scrapping daily mass testing, health codes and centralised quarantine requirements for most cases.

The new measures are being viewed by many as the beginning of the end to three years worth of strict Covid restrictions that crippled global supply chains as China’s manufacturing and exports plummeted.

Easing restrictions will allow key producers in China to quickly ramp up operations and match the rest of the world’s pace as it seeks a return to pre-pandemic productivity levels.

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China’s gross domestic product for 2023 is expected to get a boost from economic activity in the second half of the year, according to the Economist Intelligence Unit (EIU).

Economists and industry players broadly expect China’s reopening to bolster a global economy that has grappled with sustained high inflation, and project a sharp uptick in demand for commodities and components needed for products such as the ubiquitous iPhone that is typically assembled on the Chinese mainland.

But China’s reopening could also affect demand for another product that’s universally desired.

Before imposing extended Covid lockdowns, China had one of the world’s largest appetites for fuel sources to power its burgeoning industries.

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Among its most sought-after commodities was liquefied natural gas, which is also a key energy source western Europe relies upon for everything from powering industry to heating homes in the winter.

With European domestic energy prices already hitting record highs thanks in large part to sanctions on Russian gas over the Ukraine war, increased demand from a revived Chinese industrial complex may end up adding further upwards pressure on the vital commodity.

At the same time, like every other nation that chose to reopen after a period of strict Covid curbs, China is expected to experience a surge in cases in the first six months of 2023, which will continue to exert downwards pressure on supply chains and consumption, the EIU said in a report on Tuesday.

China has already seen a spike in cases after it began easing anti-Covid measures, recording more than 40,000 infections on November 28 – the highest total since the Wuhan outbreak in early 2020.

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Surging infections in China may also lead to some apprehension among neighbouring countries in regards to another key industry – tourism. The tourism sector suffered immensely from the pandemic, particularly in Asia.

Chinese tourists accounted for the largest group of visitors to many destinations in Southeast Asia before 2020, and were among the biggest spenders.

About 32.3 million Chinese travellers visited the 10 member states of the Association of Southeast Asian Nations in 2019, more than double that of second place Singapore, according to data from the Asean Stats Data Portal.

That figure plummeted to about 4 million Chinese visitors in 2020 when the pandemic hit and China effectively closed its borders to the world.

Airline personnel check on passengers upon arrival at the Xiamen Gaoqi International Airport in Xiamen, Fujian province, China on Tuesday. Photo: EPA-EFE

The prospect of Chinese tourists flocking back to their old playgrounds in Southeast Asia will be a boon for the region’s tourism players, many of whom continue to earn barely enough to keep their heads above water despite the optimism that followed when borders reopened earlier this year.

But with opportunity, also comes risk.

As millions of Chinese tourists eventually start returning to holiday spots around the world, the question is whether nations and their governments are ready to manage a potential surge in coronavirus cases, and can afford to take drastic measures should things go awry.

Joseph Sipalan is a reporter for the South China Morning Post’s Asia desk.