China Rejoins The Party

The easing of Covid restrictions may be the boost the flagging world economy needs

- Enda Curran

The 269 passengers on China's first direct flight to Thailand since the end of Covid Zero restrictions got an extra-special welcome when they disembarked in Bangkok from Xiamen on Jan. 9. The country's deputy prime minister showed up to present them with orchid bracelets. There was good reason for the warm welcome: Thailand expects 7 million to 10 million Chinese travelers to arrive by air this year and hopes their spending will help power an economic recovery.

Around the world, economies that rely on tourism and commodities are set to receive a shot in the arm from China's sudden reopening, as consumers unleash some of the 5.6 trillion yuan ($830 billion) in excess savings they built up during the pandemic. Demand for air travel, hotels and spots at foreign schools and universities will light up as Chinese pack their bags for international travel for the first time since Covid-19 struck. Thailand attracted around 11.5 million foreign visitors last year-way down from the 40 million who visited in 2019, before the pandemic, when almost a quarter were China. While Thailand and other tourism-heavy nations in Southeast Asia such as Singapore and Vietnam will likely be the first to benefit, developed economies including Japan and the UK will also get a lift.

Thanks to the reopening, China may account for half of global gross domestic product growth this year, according to an estimate by Natixis SA. Economists predict that China's economy will expand by close to 5% in 2023, ahead of the 3% growth registered last year.