China’s abandonment of its zero-Covid-19 policy is a positive economic development for it and the rest of the world. However, while the short-term financial market response may have been ebullient, it doesn’t mean investor concerns will, or should, go away any time soon.
The Chinese were not the only economic casualty of zero-Covid; foreign investors were similarly harmed. Zero-Covid is just one in a long line of decisions taken at the top echelon of the Chinese government that has negatively affected investors and that has caused deeply negative investment returns.
Aggressive political rhetoric is not helping China’s economic prospects — or the way investors view the country as an investment opportunity. Though China’s manufacturing sector will undoubtedly get a boost from returning factory workers, and the resumption of tourism will boost its services sector, other factors are at play. China’s manufacturing sector has not only been weak due to its zero-Covid policy but also due to weak demand from the West.