The International Energy Agency (IEA) has said that China and Russia are the two “wild cards” for global oil markets this year. China meanwhile is the wild card for the global economy as well as stock markets in 2023.

In 2022, China’s GDP rose by 3% which was the second lowest since 1976. The country’s growth however rebounded towards the end of 2022 as it gave up its zero-COVID policy.

Commodity prices, including oil, have rebounded amid hopes of a revival in Chinese demand. China is the biggest consumer of most commodities including oil. However, it relies on imports for most of its needs and is the largest oil importer. There is a beginner’s guide for trading oil.

The IEA predicts that global oil demand would rise to all-time highs in 2023 on the revival in the Chinese economy. It said, “Russian supply slows under the full impact of sanctions (while) China will drive nearly half this global demand growth even as the shape and speed of its reopening remains uncertain.”

Notably, while Western economies seem headed for a recession, China looks like a different ballgame. Standard Charter Chairman José Viñals believes that the Chinese economy will be “on fire” in the second half of 2023.

The expected rebound in the Chinese economy has led to a rise in many commodities including copper. Copper is also among the metals which benefit from the higher adoption of electric cars. There is a guide on trading commodities like copper.

China is the Wild Card for Global Oil Markets

Meanwhile, the rebound in the Chinese economy depends on multiple variables including its exports sector. The country’s exports fell YoY in December as demand for Chinese goods weakened abroad due to slowing economies.

KraneShares’ international head, Xiaolin Chen believes that the Chinese consumer sector would be the key to the revival in the Chinese economy in 2023. Chen said, “As external demand falls due to an impending recession in the West, China’s economy must rely more heavily on the consumer.”

He is also optimistic about a revival in the Chinese real estate sector. He said, “Fortunately, reopening and a fresh infusion of capital in China’s real estate development industry have the potential to boost consumer confidence significantly, which would be a catalyst for China markets in 2023.”

China Has Signaled that the Tech Crackdown is Over

China has given ample signs of rapprochement with investors after the tech crackdown.

The China Banking and Insurance Regulatory Commission approved Ant Financial’s request to more than double its registered capital for the consumer unit.

This would also pave the way for an eventual IPO of the company. We have a list of some of the upcoming IPOs in 2023.

China has also allowed downloads of Didi apps after a gap of over two years. Notably, China’s image as an investment destination and manufacturing powerhouse took a beating from the tech crackdown and stringent lockdown measures. Alibaba especially bore the brunt and in 2021 it paid a record $2.8 billion fine to settle the antitrust case.

Several foreign companies have been looking to diversify their sourcing from China to other Asian countries. Apple is planning to diversify its sourcing to countries like India and Vietnam. India is offering incentives to electronics manufacturers as the country seeks to capitalize on the “China plus one” sourcing strategy that many US companies are contemplating.

Indian stocks outperformed global markets in 2022 amid a strong domestic economy. We have a guide on how beginners can buy stocks in India with a regulated broker.

Recession Warnings Pile Up

Many agencies now expect the world economy to head toward a recession in 2023. The World Bank recently slashed its 2023 global GDP growth forecast to a mere 1.7% which is way below its previous projection of 3% growth. It also fears a recession this year amid slowing global growth.

Even the IMF predicted that a third of the world would be in a recession this year. IMF’s head Kristalina Georgieva said, “Even countries that are not in recession, it would feel like recession for hundreds of millions of people.”

While recession impacts most sectors of the economy, some of the investments are largely recession-proof.

Meanwhile, while India remains among the bright spots for the global economy this year, given its sheer rise and multiple variables, China is the wild card as far as the world economy is concerned.

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