OECD Secretary-General Mathias Cormann emphasized on Monday that China’s reopening represents a significant positive development in the global effort to combat soaring inflation.
“We certainly very much welcome the easing of Covid related restrictions in China,” Cormann told at the World Economic Forum in Davos, Switzerland.
“Over the short term, it will come with challenges and we’re seeing heightened levels of infection which are likely to have some short-term impacts,” he added.
“But over the medium to longer term, this is very much a positive in terms of ensuring that supply chains function more efficiently and effectively, that demand in China and trade more broadly resumes in a more positive manner.”
China lifted most Covid controls abruptly in early December, leading to a surge in infections among its 1.4 billion population.
Last Saturday, Beijing reported that nearly 60,000 Covid-related deaths had occurred in hospitals since the country relaxed its strict Covid restrictions last month, marking a notable increase from previous figures.
Economists in recent weeks have cited China’s reopening, coupled with a flurry of positive economic data surprises, as reasons to revise their previously pessimistic forecasts.
“One of the factors driving inflation was the supply shock stemming from global supply failing to keep pace with global demand … as swiftly as required,” Cormann explained.
“Therefore, China re-engaging in the global market in a significant way and supply chains operating more smoothly will contribute to easing inflation. Clearly, this is overwhelmingly positive.”
