China’s reopening has been one of the most discussed topics at the World Economic Forum in Davos.
DAVOS, Switzerland — China’s economic reopening might boost global growth, but the business leaders and policymakers at the World Economic Forum this week are also a little anxious on its potential inflationary impact.
China’s decision to welcome tourists again as well as to make it easier for those in the country to travel abroad has been one of the most discussed topics at the Davos gathering in the Swiss Alps.
Overall, this is seen as one of the most important economic events in 2023 and the business community is noticeably excited about making new deals with the world’s second-largest economy.
On the other hand, however, there are concerns about what this means for inflation and the cost of living.
“[If] Chinese demand for other goods starts picking up, if that creates a bigger pressure on commodity prices, for example, natural gas, big issue in Europe, if Chinese natural gas demand increases, because the factories, their households demand more electricity, then it’s going to put pressure on Europe because natural gas, they’re competing [in] the same markets for liquid natural gas,” Raghuram Rajan, former central bank governor of the Reserve Bank of India, told CNBC.
“So China’s opening [is] good news overall, but potentially, the inflationary impact — there could be some,” he said.
China’s reopening ‘good news’ for growth – but could be inflationary, economists warn at Davos
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