China’s authorities appear to have given up trying to manage the spread of COVID-19. If we’re right, the surge in infections underway in Beijing will spread rapidly across the country. As is happening now in the capital, many people will stay at home if they can and many firms that can’t operate remotely will be forced to reduce staffing. We now expect sharp falls in activity this quarter and next. The reopening wave of infections should have fallen back by the second quarter of 2023, paving the way for a strong rebound.
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