30-09-2022 Shipping should keep a wary eye on China’s uncertain outlook, Lloyd’s List
Concerns over China’s economic prospects are mounting, with bigger risks lurking beneath the slowdown. Shipping that relies on this vast market on many fronts should take note. Draconian lockdowns and an ailing property market are seen among the biggest factors weighing on the country’s economy. Both are the results of heavy-handed policing. The government is easing the housing policy to encourage purchases. But few buyers are responding with enthusiasm. This is partly because Beijing’s continued zero-Covid strategy, which scrambles factories and consumers in China into a state of uncertainty, has obscured their views of a recovery.
Economists and analysts can foresee no better. “[China’s] outlook for the coming year seems unusually unclear, even though we are already at the end of the third quarter,” Nomura said in recent days. “Beijing continues to fire on all cylinders to stamp out the coronavirus. It has yet to release a clear road map for exiting its zero-Covid strategy.” Pessimists expect strict Covid rules to remain in place until March next year when the National People’s Congress will be conveyed to confirm President Xi Jinping’s third term, rather than the 20th party congress, which is less than three weeks away. The resilience of Chinese economy may allow it to withstand a few more months of this ordeal.
It may be even true that shipping could benefit from China’s return to infrastructure investment and fiscal stimulus to reignite its growth engine, as Standard Chartered chief strategist Eric Robertsen told a Marine Money forum. But what is more worrying is the political color that has been applied to China’s virus-control policy. Bragging about having purportedly the lowest Covid death rates worldwide, Beijing uses this argument to prove the Chinese system is better. Others that have gone down a co-existence path have simply sniffed and increasingly see the Middle Kingdom as an outlier. The widening ideological divergence matters in a way that is more profound than a short-term economic gyration, especially when the tensions between China and the west are escalating. The recent setback for Cosco’s Hamburg port terminal deal is a good example. The state-owned giant’s proposed acquisition of a 35% stake in Container Terminal Tollerort has been pushed back amid political resistance from Berlin.
Prominent Chinese economists have already started to debate about the fate of China’s open-door policy, with voices supporting a self-sufficient, state-controlled economy garnering more attention. And Mr. Robertsen’s fellow speaker, Maersk Tankers chief commercial officer Eva Birgitte Bisgaard, also brought up the situation in Taiwan, warning that further scarcity of semiconductors would likely push inflation higher and trigger a global recession. China’s growing military aggression towards the self-governed island was highlighted by the unprecedentedly large-scale drills it launched in the Taiwan waters earlier this year. The risks to trade and shipping from the situation in Ukraine are already ballooning. God forbid we’ll have another.