The Macro Brief: Shanghai Lockdowns Return for Mass Testing Amid New Flare - Bloomberg
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Shanghai has rendered lockdowns as a new Covid “flare” spikes and testing begins. It’s very interesting when these apparent lockdowns begin.
The massive city of over 24 million people just exited lockdowns not too long ago; and this next wave is causing those in Shanghai to panic buy groceries and other necessities.
Back in April, I called out the March lockdown that begin two weeks prior as a “scapegoat” for the underlying stress in “Shanghai Scapegoat Covers China’s Distress.”
There’s also parts of Beijing being restricted, like entertainment venues.
I have been chatting with Tony Nash, founder of Complete Intelligence, an artificial intelligence platform for financial data and automation.
Tony definitely keeps his finger on what’s going on in China, and Asia more broadly, as he has previously resided in Asia for over a decade.
Below, you’ll get to see Tony's view on the reoccurring lockdowns. I’ll follow up with a Macro Strategist Pro only exclusive chart deck!
This is an exclusive piece by Tony Nash (Complete Intelligence) for The Macro Strategist community. We strive to offer differing opinions from thought provoking individuals.
China is probably a bigger risk to your portfolio than many want to admit
We’ve seen China yo-yo from early covid battleground in Q1 2020 to a poster child for sound Covid policy in late 2020 and through 2021.
Recent months have shown us that China’s response to the latest covid outbreak is more of a brute show of power than a well-planned public health exercise.
How do we know? Well, China claimed to have 187 new covid cases on Saturday May 21, while the US reported 27,181.
China claims 1 (that’s ONE) covid-related death, while the US reported 38. Yes, you read that right. China has 4x the US’s population, yet it has 1/38th the number of covid-related deaths.
All this to say that China has closed some very large cities, the largest port in the world and the world’s manufacturing hub for a 0.00000006948% chance of death from covid on a daily basis.
I don’t believe it. It’s too low of a risk to close an economy as large as China’s.
It displays the erratic nature of China’s governance. And it presents a systemic risk to every manufacturer and every consumer – not to mention every government – globally.
If China is to restore its credibility, its government has got to get a grip on reality and respond to a public health event in proportion to the real risk posed.
That means not closing due to a 0.00000006948% chance of death each day.
If China insists on closing major manufacturing centers and ports because of a 0.00000006948% chance of death, it must admit that it is an unreliable trading partner, an unreliable diplomatic partner and an unreliable investment destination.
There was a time when China sought credibility. No longer. Until public health and lockdown policies change, China is a bigger risk than many want to admit.
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