The world is watching as China’s Delta outbreak hits an already vulnerable economy

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As the economy roared back in the second half of last year on the back of extraordinary global demand for its medical equipment and supplies and, subsequently, consumer goods it refocused on domestic risks.

Its debt-to-GDP ratio had blown out from 255 per cent in 2019 to about 280 per cent, which probably significantly understates the ratio, given that China’s local governments are masters at raising “hidden” off-budget debt.

The initial waves of the pandemic, coupled with the continuing after-effects of the trade and sanctions wars between the US and China and the additional layers the Biden administration has added to both, caused enormous and continuing disruption to global supply chains. The shortage of semiconductors, in particular, is disrupting production of complex manufactures, most notably (but far from exclusively) automobiles.

China’s economic rebound faces a big challenge as it deals with a Delta outbreak.Credit:Bloomberg

As the…

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