The more pragmatic turn in economic policy from Chinese policymakers at the end of 2022 led to an abrupt shift in investor sentiment towards China and a sharp boost to the global economic outlook. More recently, a rise in geopolitical tensions with the United States has cast a shadow on the performance of equity markets, but the positive impact of a Chinese economy that is once again engaged with the world is hard to ignore in the near term. The longer-term focus on financial and economic stability will drive investment and opportunity in the Chinese economy. When Covid-19 pandemic-induced restrictions are lifted, there is a fairly common pattern that follows: case numbers spike and people spend big. After weeks and months of thinking about where to travel and what food to eat or things to buy, scratching the “ revenge spending ” itch translates into a powerful economic pulse, especially for a cashed-up consumer newly freed from mobility restraints. This reopening effect and its associated economic impulse are occurring quickly in China. It can already be seen in the mobility indicators such as subway flow data, traffic congestion, or the number of domestic flights . These have bounced back to close to 2019 levels – a time before Covid-19 was a household name. We all know that China is big. It is about 20 per cent of the global economy and home to more than 15 per cent of the world’s population. The impact on consumption both inside and outside China shouldn’t be overlooked. The restrictions of the past three years have created both pent-up demand and excess savings to fund that demand. This is a powerful economic driver for China’s economy but also for those markets that produce in-demand products, such as luxury goods from Europe or in-demand destinations around Asia at a time when they might be facing weaker demand from other parts of the world. The National People’s Congress will meet early next month . We will learn then whether this near-term drive in the economy will be supported by longer-term growth incentives. It is worth remembering that it was not just the pandemic that restricted the growth outlook in China. Policies related to “ common prosperity ” and the ongoing deleveraging of the economy , especially the housing market, created headwinds to growth and investor sentiment. There could be some expectation of additional measures to support the economy outlined in the government work report to achieve an annual growth target that could be around 5.5 per cent . However, it is more likely that the policy will focus on the stabilisation of domestic demand as the economy surges out of the pandemic rather than further easing policy settings that could stoke inflation or potentially lead to unwanted asset class speculation. Nurturing any economy through the rather traumatic Covid-19 experience does mean that policy settings are likely to remain easy . Compare this to the US, where both fiscal and monetary policy are getting tighter and risk choking off economic growth. Why oil prices are not hitting the roof on China’s economic reopening In China, this could be done through more lending facilities to support investment in infrastructure or stalled property projects . Officials have already eased back on some measures imposed on the housing market as they support the completion of planned projects or reassure private businesses on further regulatory reform. This is not to say that the goals of common prosperity and containing financial risk in the property market have changed, but the approach to implementation in the near term could look different. Monetary policy is already rather loose and will remain that way. Even so, further cuts at a time when growth is already rebounding would be very much an exception. The pandemic was an unwelcome detour on the growth path for China that interfered with long-term plans for the economy. Some of the longer-term focus on structural changes could be put on the back burner in the short term and the policy focus will be on near-term economic stability and prioritising growth. However, officials are expected to continue to explore the opportunities to direct capital to areas of the economy which have strategic importance with longer-term objectives. This could be to support the transition towards a carbon-neutral economy , steps to address demographic challenges or supply chain independence when it comes to the provision of technology. The world should enjoy the benefits of China’s reopening now, but it should also keep a watch on the country’s longer-term goals. Kerry Craig is a global market strategist at JP Morgan Asset Management