Economic fallout from continuing Covid lockdowns in Shanghai and elsewhere in China is hard to predict. Overall declines in China share prices this year, especially in Hong Kong, contributed to a drop in the number of mainland billionaires on the new 2022 Forbes Billionaires List unveiled today. (See related post here.)

Ultimately, however, the current Covid-related disruptions are likely to be followed by monetary, fiscal and regulatory policy easing in the second half of the year, Matthews Asia Investment Strategist Andy Rothman said in a telephone interview from San Francisco today.

“My assumption is that over the next few months, they will get this under control so that lockdowns will be lifted,” the long-time China watcher said. “And then we’ll see Chinese officials go back to the (policy) playbook that they started announcing in December and then put more details on earlier this year, which amounts to a significant easing of monetary, fiscal and regulatory policy at the same time that the US is going to be tightening.”

“My expectation is that if Covid and the associated lockdowns do material damage to the economy over the next few months, then in the second half of the year, this monetary, physical and regulatory easing will be enhanced and be doubled down by the government, he said.

Prior to joining Matthews Asia in 2014, Rothman spent 14 years as CLSA’s China macroeconomic strategist; Earlier, he worked for 17 years in the US Foreign Service, with a focus on China, including as head of the macroeconomics and domestic policy office of the US Embassy in Beijing. Interview excerpts follow.

Flannery: How do you size up the impact of lockdowns on China’s economic outlook this year?

Rothman: It’s a hard question to answer because it’s really hard to forecast what the public health impact of Covid will be in the coming months in China. But I think it’s helpful to look back a little bit when we think about this.