Crude oil futures fell to their lowest level of the year Wednesday amid growing concern about the state of the global economy.
Why it matters: Crude oil prices are a tell on the global economy, which looks like it could be in trouble.
Driving the news: The sell-off came despite ostensibly good news for the economy, as China announced plans to scrap the harsh regime of testing, quarantine and lockdowns that have pushed the nation’s growth rate well below goals set by officials.
- Growth for the first nine months of 2022 was 3%, well below the 5.5% full-year target the government sets for China’s GDP.
Yes, but: In theory, the end of so-called zero-COVID policy should be a good thing for global business, if it means the world’s second-largest economy shakes off its malaise.
The bottom line: The market seems to be saying that’s a very big “if.”
- Under the rule of Xi Jinping, the country’s leadership has de-emphasized the importance of economic growth, focusing instead on returning China to the top ranks of the world’s great powers.
- In part, that’s because China’s economy faces serious challenges across a range of fronts, including a housing market collapse, flight of global capital and rapidly rising barriers to accessing the world’s top technology.