EVERYTHING IS GOING SWIMMINGLY: China’s Reopening Comes With a $720 Billion Inflation Bomb.

There likely will be two forms of inflationary shock China will impart on the rest of the world this year.

First will come a negative impact on supply thanks to what amounts to non-mandatory lockdowns in China, with factories struggling to keep operations going as sick workers stay home.

Then comes the demand shock, when Chinese consumers resume spending in force, pushing up commodity prices. Weaker spending in the US has helped hold down commodity costs lately, but at some point Chinese imports will boost price pressures.

And don’t forget the export of Chinese demand, most prominently in the form of tourism.

“After three years of isolation, there’s plenty of pent-up demand for foreign travel. We expect outbound tourism to have recovered from virtually nothing to 75% of the pre-pandemic level by the end of 2023,” Sheana Yue, an economist at Capital Economics, wrote in a note Friday.

International policymakers are already on the alert.

That last line isn’t nearly as comforting as the author intended.