China has finally relaxed its zero tolerance on covid-19 after more than one thousand days. That makes it easy to travel within and outside China. Few countries put restrictions on travelers from China, unlike in the early days of the pandemic.
We may understand the pandemic better or have more faith in medicine and vaccines. The costs of such restrictions are better understood.
We are still wondering how the pandemic came and left, and our lives almost returned to normal despite economic consequences like job losses and the grief over deaths and disrupted lives.
Why was the reopening of China headlines? It meant recharging the economy with smother supply chains, higher productivity, and a possible fall in prices of consumer products. Here is why.
Without movement restrictions in China, importing raw materials and exporting are easy and cheaper. China’s Covid -19 zero-tolerance restricted the movement of workers, goods, and service providers, making transport and logistics expensive.
Restrictions meant workers and machines did not work to total capacity reducing the number of goods and services available in the market. This naturally leads to higher prices. Remember, China is the world’s workshop, and many industries felt the restrictions – in terms of costs.
Opening China will make global logistics, transport, and supply chains smoother and cheaper. As a result, consumers should feel the effect of lower prices. Transport and logistics determine the shelf price of many commodities, particularly with outsourcing, a norm in manufacturing.
We expect the opening of China, which now feels like the other opening by Mao Zedong in 1978, to be felt by other countries through trade.
That would lead to higher GDP growth, much welcome with Ukraine war in the background.
At Bramex, we help our customers get value for their money in logistics and transport. We shall ensure any benefits accrued from the reopening of China are shared with our esteemed customers and with a smile.