With the exception of the expected effects on the tourism sector, the generalized deconflection of China could well increase a little more ultimately inflationary tensions in France.
by Béatrice Madeline
The end of zero covid policy in China? “The most obvious impact for the French and most direct economy is the return of Chinese tourists,” replied François Chimits, economist at the Center for Prospective Studies and International Information (CEPII) and Mercator Institute for China Studies (MERICS). Blessed bread for professionals in the sector, and a little boost to hexagonal activity, since “this represents several tenths of GDP point, entirely generated on the national territory”.
But for the rest, there is no miracle to expect from the reopening of China. Firstly because at first, the end of zero covid results in an explosion of contaminations, with its share of side effects on the economy … and which can have the same type of consequences as zero covid policy -Meme.
Absenteeism may soar for a few weeks, and the Chinese could limit their trips or outings, and therefore consume less. “For companies that use subcontracting in China, these constraints on supplies are likely to penalize production and activity on the first part of 2023, if they have not stored sufficiently goods beforehand,” observes Anthoine Berthou, economist at the Banque de France, also evoking “an increase in delivery times”.
It is on the inflation front that this reopening feeds the most concern. “This is not excellent news in the current context of very high energy prices,” said Maxime Darmet, France economist at Allianz Trade. First global oil consumer, “China is also very voracious in raw materials, which will increase prices, delaying the disinflation and the drop in interest rates with us”.
This is the whole paradox: by weighing on the offer and on the supply chains, Chinese confinements attributed inflationary tensions. But widespread deconflection will not have the opposite effect. “From the second quarter, the activity will accelerate, consumption will take off,” says Darmet. However, a strong resumption of the Chinese economy could then “coincide with gas needs for next winter”, adds Julien Marcilly, chief economist at Global Sovereign Advisory. “We will find ourselves in an increased situation of competition to attract liquefied natural gas stocks, whose production capacities on a global scale are limited”.
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