China tears off COVID Band-Aid

China has done an incredible job for three years to limit the spread of COVIID through its population. Due to rioting and recent social pressures, the government has removed the constraints and COVID is likely to quickly spread though its population. I expect a month or two of chaos as the hospitals fill and deaths mount (if proportional to the much slower spread through our population, they could mounts to 3-3 million over a comparatively short period of time). Nearly all production and logistics will be adversely affected.

This is a REALLY BIG deal as it will mess up our supply lines and, if not properly spun by the Chinese government (as in, “we told you this was not a good idea”), could provide the most significant political stress in decades (no wonder Xi waited until after his reelection to allow the constraints to come down).

This, I fear, will have missive, but hopefully short-term macro implications for US inflation and even geo-political policy.



Thanks for that. I googled it and saw a lot of theose headlines, but I wonder if a lot of that is market manipulation by the media??? The numbers see to tell a completely different story…but of course, have no idea what to believe.

Saw that information reported on the BBC last night. A week ago, they were reporting China easing the draconian measures they have employed over the last 3 years. Skepticism of anything on the “news”, that would trigger “shock” or “alarm” would seem to be justified, given the media’s past performance, but the daytime video of empty streets in a major city gives the report credibility.



The “good”: The current Omicron strains cause much less damage than some of the previous strains (Delta, etc), so if there’s any time to choose opening up, this may be it.

The “bad”: Letting a virus run rampant in a >1B population will result in all sorts of new strains mutating out of it. Who knows if some weird combination of strain could emerge (perhaps from people who had pre-COVID-19 strains back before late 2019, and now get it again)?

Realistically, there was no way to keep China “closed” forever anyway, so now’s as good a time as any recent time.