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    China’s Reopening: Economic Growth and Investment Opportunities, Inflationary Effects, and US-China Relations


    China’s reopening from Covid-19 restrictions is a welcome development that will not only accelerate the country’s economic recovery, but also boost global economic growth.[0] On February 10th 2023, Goldman Sachs Research released a report forecasting China’s GDP to grow by 6.5% in 2023 on a Q4/Q4 basis and the recovery of Chinese domestic demand to raise global GDP by 1% by the end of 2023.[1]

    Economists expect China’s GDP to rebound to around 5% this year from 3%in 2022, led by a recovery in consumption which is projected to grow 7% this year after a contraction of 0.5% last year.[2] Investors are advised to be most preferred on Chinese and emerging market equities, and to look for opportunities in Chinese sectors that will directly benefit from the country’s reopening.[1] These include pharmaceuticals, medical equipment, consumer, internet, transportation, capital goods, and materials.

    With China’s reopening policy prioritising economic growth, this opens up sizeable economic growth and investment opportunities.[3] Morgan Stanley analysts are predicting a 5.7 percent GDP growth this year, and Chinese Vice-Premier Liu He’s speech at the World Economic Forum annual meeting in Davos suggests government policies will be adjusted to encourage growth.[3]

    The reopening is also likely to boost global commodities demand and prices, particularly for oil.[3] It is estimated by our commodities experts that Chinese oil consumption could climb approximately 1 million barrels a day, leading to an approximate price increase of $15 per barrel for Brent oil.[4] Higher oil prices will weigh on economic growth for most economies, but net oil exporters such as Canada and some Latin American economies could benefit.[4]

    However, the reopening could also lead to inflationary effects.[2] While the impact on core inflation is likely to be minimal, rising commodity prices will contribute to headline inflation, particularly for oil-dependent emerging markets.[4] China’s reopening could account for a 0.5 percentage point boost to headline inflation in many economies according to Goldman Sachs Research.[2]

    US-China relations remain a popular conversational topic and provide a safe-haven bid for the US dollar in Asia, as investors hedge bets against the Biden administration's anti-China plays.[5] Meanwhile, China stocks may be losing some momentum, but some investors believe shares will continue to go up after a short-term pullback.[6]

    0. “Why China’s Reopening Could Be a ‘Ray of Sunshine’ for the U.S. Stock Market” Money, 10 Feb. 2023,

    1. “China's rally interrupted, not ended” UBS, 7 Feb. 2023,

    2. “China's Reopening Bodes Well for Asian Fixed-Income Markets” AllianceBernstein, 7 Feb. 2023,

    3. “China is Back: What Its Reopening Means for the World” INSEAD Knowledge, 9 Feb. 2023,

    4. “China's Reopening is Poised to Boost Global Growth” Goldman Sachs, 10 Feb. 2023,

    5. “China's Fork in the Road”, 10 Feb. 2023,

    6. “Four Charts Show China Reopening Trade to Resume After Pause” Yahoo Canada Finance, 8 Feb. 2023,

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