2023 The Year of China's Covid Reawakening

2023 is the year of China’s reawakening from its long Covid hibernation.

That’s what energy and environmental geo-analytics company Kayrros said in a new report sent to Rigzone, adding that, “given the size of its economy and its share of global energy consumption, this could be a big deal”.

“So far, one of the clearest signs of the end of Beijing’s Zero Covid policy may be the jump in air travel, which has more than doubled Chinese jet fuel demand almost overnight,” Kayrros stated in the report.

“Air passengers took a resurgence in Covid rates in their stride, but until now the recovery is limited to domestic flights. Intriguingly, Beijing Capital airport, the nation’s busiest airport pre-Covid, is lagging behind several other hubs,” Kayrros added.

In the report, Kayrros said there is widespread speculation that the restart of China’s economy could send oil prices through the roof, “especially in the wake of a European ban on Russian crude imports and G7 price controls that took effect last month”.

So far, however, “satellite data shows global onshore crude stocks ended up in early January about where they left off at the end of November, suggesting the market remains in balance”, Kayrros highlighted.

In a separate report sent to Rigzone on Monday, BofA Global Research noted that, with the easing of China’s Covid policy for travelling and opening of borders, the BofA APAC Transport team “expects a material progress in international bookings in 2023E with volumes at 40 percent of 2019 levels from two percent in 2022”.

In a briefing sent to Rigzone recently, Goldman Sachs said “daily Covid cases appear to have already peaked, based on news reports as well as other data points such as internet search frequency for virus-related topics”.

“There’s also evidence that people are moving more freely around the country and across borders. Officials in China appear to be focused on reviving economic activity this year,” the Goldman Sachs briefing added.

According to the latest figures from the World Health Organization (WHO), daily confirmed Covid-19 cases in China have dropped from 44,800 on January 5 to 22,498 on January 16. The country’s daily Covid-19 case peak came on May 28, 2022, at 94,753, WHO data shows.

U.S. Energy Information Administration (EIA) analysis last updated in August 2022 shows that China was the largest energy consumer in the world and the second largest petroleum and other liquids consumer in 2021.

To contact the author, email andreas.exarheas@rigzone.com