The market is worried about the right place, but for the wrong reasons

Author: Adam Button | Category: News

China to face new pandemic challenges

China to face new pandemic challenges
The Hang Seng fell 4.1% and the Shanghai Composite dropped 2.1% earlier today that was triggered by regulation worries after a crackdown on education companies.

New regulations ban firms that teach school curriculums from making profits, raising capital or going public.

For the broader macro economy, that's a non-event but what is worth worrying about is covid in China. The delta variant is much more transmissible and will increasingly challenge China's strict controls to stop it -- similar to what's unfolding in Australia.

Just now, the city of Nanjing -- population 8.5m -- has gone into a strict, stay-at-home lockdown after an outbreak that was believed to begin at the airport. Officials reported 76 new cases yesterday.

Chinese lockdowns match the true definition of the word and are a major curb on economic growth.

It seems to me that we're going to have a painful transition towards living with covid in the places that have prided themselves on total suppression.


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