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As I see it | Asia set for both gain and pain as reopened China soaks up oil demand

  • Oil markets appear set for another period of turbulence as Russia cuts output and China’s demand grows
  • Some resource-rich Asian nations like Indonesia will benefit from the demand, but others like Pakistan are likely to suffer, delaying the region’s path towards a full recovery

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Shanghai Yangshan Deepwater Port Container Cargo Terminal in Shanghai has become one of the world’s largest container port. Oil markets appear set for another period of turbulence as China’s air and road travel have roared back. Photo: Shutterstock
The chances are that Asia’s gain will also bring some China pain.

China’s National People Congress (NPC) last week set a modest 5 per cent growth for this year, surprising many who had expected lawmakers to aim for higher growth after strict Covid-19 controls took a toll on the economy.

While some observers say that the soft outlook is based on estimates when China’s reopening was still under way at the end of 2022, the forecast indicates the nation wants to strike a balance and prevent inflation from heating up.

Such an approach is likely to be severely tested in coming months.

For years, the world’s second-largest economy has been the biggest driver of commodity markets. Prices of many items like iron ore – a critical input for steel – ran up after Beijing scrapped its zero-Covid policy at the end of last year.

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