China prepares new COVID rules as investors cheer easing of postponement

  • New nationwide COVID rules due as early as Wednesday – sources
  • Shift follows widespread demonstrations over the past month
  • Yuan firms, global markets rebound on China’s hopes

HONG KONG/BEJING, Dec. 5 (Reuters) – China is expected to announce further easing of some of the world’s toughest COVID curbs as early as Wednesday, sources told Reuters, as investors hailed the prospect of a policy shift that follows widespread protests and increasing economic damage.

Three years on from the pandemic, China’s zero-tolerance measures, from closed borders to frequent lockdowns, stand in sharp contrast to the rest of the world, which has largely chosen to live with the coronavirus.

The crackdown has battered the world’s second-biggest economy, psychologically distressed hundreds of millions and last month sparked the biggest public discontent in mainland China since President Xi Jinping took power in 2012.

Although protests have largely subsided over the past month amid heavy police presences in major cities, regional authorities have since scaled back lockdowns, quarantine rules and testing requirements to varying degrees. Top officials have also softened their tone on the dangers of the virus.

A new set of nationwide rules is set to be announced soon, two sources with knowledge of the matter said, paving the way for more coordinated easing.

Beijing is also weighing whether to scale back its management of the virus to reflect the less serious threat it already poses in January, the sources added.

Analysts are now predicting that China could drop border controls and reopen the economy earlier than expected next year.

“The risk of an earlier but managed exit has increased,” Hui Shan, China’s chief economist at Goldman Sachs, said in a statement Monday, adding that the bank expects such a reopening from April. Other analysts expect a reopening in the second half of the year.

But patchy easing over the past week has some in China fearing being caught on the wrong side of rapidly changing rules.

Yin, who lives in a small town near Beijing, said her in-laws had developed a fever and she had a sore throat, but they refused to be tested for fear of being thrown into government quarantine.

“All we want is to recover at home,” she told Reuters, speaking on condition of anonymity.

The yuan jumped to its strongest level against the dollar since mid-September amid a broad market rally as investors hope the easing of pandemic restrictions will brighten the outlook for global growth.

In another hopeful sign, a source at Apple supplier Foxconn (2317.TW) told Reuters the company expects its COVID-hit Zhengzhou factory — the world’s largest iPhone factory — to be in full production this month or early next month will resume.

Economic data underscored the damage the curbs have done as services activity slipped to a six-month low in November.


Along with the easing in various cities, Vice Premier Sun Chunlan, who oversees China’s COVID effort, said last week that the virus’s ability to cause disease has weakened.

This change in messages aligns with the position that many health officials around the world have been taking for more than a year.

Major cities across China have continued to ease lockdown measures in recent days.

Among them, the eastern city of Nanjing has dropped the need for a COVID test for public transportation use. Beijing too, although access to many offices in the capital still requires negative testing.

“I can’t feel any noticeable change yet,” said Randle Li, 25, a marketing executive in Beijing. Li said his company still requires him to get tested every day to go to the office.

Elsewhere, official numbers of new infections have also fallen as testing requirements have eased.

Hu Xijin, a prominent commentator and former editor-in-chief of the state tabloid Global Times, said in a blog post that some official figures are likely underreporting the spread of the virus due to lower testing rates.

While last week’s protests have died down, frustration can still boil over, as shown by events this weekend in downtown Wuhan, where the virus first emerged in late 2019.

On Saturday, people smashed down barriers in an apparent attempt to break out of a lockdown at a textile industrial park, video clips posted to Twitter showed.

Then on Sunday, dozens of students stood outside a city university in the rain demanding more “transparency” in the school’s COVID policies, other videos showed.

Reuters was able to confirm that the incidents happened in Wuhan.

Reporting by Ryan Woo, Bernard Orr and Martin Quin Pollard in Beijing and Julie Zhu and Kevin Huang in Hong Kong; writing by John Geddie; Adaptation by Clarence Fernandez

Our standards: The Thomson Reuters Trust Principles.

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