China's Covid policy will be a wild card for markets in 2022

HOW long will China keep its zero-Covid policy? The choice Beijing makes is one of the greatest wild cards for 2022.

The consensus is that China's stance will ease after the Winter Olympics in February. This would boost consumption and stabilise the economy following its sharp slowdown last year. But Beijing is more likely to keep its current strategy of strict lockdowns and closed borders until the end of 2022. Stringent controls in China will thus keep influencing financial markets globally.

To see why, consider China's calendar of major events. This year, the lunar holidays fall at the start of February. Beijing will then host the Winter Olympics before the National People's Congress convenes the following month. If Omicron outbreaks have subsided by the end of March, the government will have a clear window to ease pandemic measures and reopen the country to the outside world.