China's CZS To Remain A Strong Focus Point For Markets

Focus on China's ZCS continues following yesterday's meeting of the new Standing committee on the issue and comments that followed afterwards. There is optimism current lockdown measures in various districts will be less disruptive to economic activity, given comments around ensuring normal life and production can resume as soon as possible, as reported by Xinhua News Agency.

• This comes despite a continued move higher in onshore covid case numbers. Indeed, the China Health Commission stated late yesterday that optimizing CZS is not loosening retractions.
• The chart below plots daily case numbers against the China Oxford Stringency Index. Interestingly, the stringency index, which lockdowns form a part of, hasn't moved higher despite the recent pick up in cases.
• Note though, the latest observation for the stringency index is the end of last week, so it may tick higher once this week's observations are updated. The stringency index has spent little time sub-50 since the measure was first introduced in 2020.
• In any event, China's CZS is likely to remain a strong focus point for markets as we progress into year-end and through Q1 2023.

Fig 1: China Daily Covid Case Numbers & The China Oxford Stringency Index