Business Maverick: China’s Covid Zero policy is an anchor on commodities prices

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Industrial commodities prices in China have regained some of their poise after Shanghai issued a road map for opening up and the central bank cut interest rates on long-term loans. The monetary easing on Friday looks to have been aimed at the embattled ...

It’s still difficult for stimulus to gain much traction if large swathes of the economy – including, now,– are threatened by the kind of disruptions that have engulfed Shanghai for two months and counting.

For as long as the government persists with Covid Zero, it seems unlikely that raw materials markets can make much headway, especially if China’s policy helps keep a lid on the power prices that underpin a lot of the cost of producing commodities. The consensus seems to be that President Xi Jinping won’t change course until he secures an unprecedented third term in power at the Communist Party congress in the autumn.

 

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