China prepares new COVID rules as investors welcome easing of changes

HONG KONG/BEIJING, Dec 5 (Reuters) – China is poised to announce further easing of some of the world’s toughest COVID restrictions as early as Wednesday, sources told Reutersas investors welcomed the prospect of a policy shift that follows widespread protests and mounting economic damage.

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

The crackdown has hit the world’s second-largest economy, put a strain on hundreds of millions and last month sparked the biggest public outcry in mainland China since President Xi Jinping took power in 2012.

Although last month’s protests have largely subsided amid a heightened police presence in major cities, regional authorities have since eased lockdowns, quarantine rules and testing requirements to varying degrees. Senior officials have also softened their tone on the dangers posed by the virus.

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

Beijing is also weighing whether to scale back its handling of the virus to reflect a less serious threat it posed as recently as January, the sources added.

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

“The risk of an earlier but managed exit has increased,” Goldman Sachs chief China economist Hui Shan said in a note on Monday, adding that the bank expected a similar reopening from April. Other analysts expect a reopening in the second half.

But the loosening over the past week has some in China fearful of being caught on the wrong side of the rapidly changing rules.

Yin, who lives in a small town near Beijing, said her in-laws had a fever and she had a sore throat, but they did not want to be tested for fear of being put under government quarantine.

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

The yuan jumped to its strongest level against the dollar since mid-September on the back of broad market rally as investors hope the lifting of pandemic restrictions will improve the outlook for global growth.

In another encouraging sign, a source from Apple supplier Foxconn (2317.TW) said Reuters the firm expected the COVID-hit Zhengzhou plant – the world’s largest iPhone factory – to resume full production this month or early next.

Economic data highlighted the damage done by the restrictions, as activity in services contracted to a six-month low in November.

CHANGE OF MESSAGE

Along with relief in various cities, Vice Premier Sun Chunlan, who oversees China’s COVID efforts, said last week that the virus’s ability to cause disease is weakening.

This change in messaging is consistent with the position taken by many health officials around the world for more than a year.

In recent days, major cities in China have continued to loosen measures.

Among them, the eastern city of Nanjing dropped the need for a COVID test to use public transportation. So did Beijing, although entry to many offices in the capital still required negative tests.

“I still don’t feel much noticeable change,” said Randall Li, 25, a marketing specialist in Beijing. Li said his company still requires him to take tests every day to go to the office.

Elsewhere, as testing requirements have been eased, official figures for new infections have also fallen.

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

Although last week’s protests have died down, frustration can still simmer, as events in the central city of Wuhan, where the virus first emerged in late 2019, showed this weekend.

On Saturday, people pulled down barriers in an apparent attempt to break out of a blockade at a garment industrial park, videos posted on Twitter showed.

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

Reuters was able to verify that the incidents took place in Wuhan.

Reporting by Ryan Wu, Bernard Orr and Martin Quinn Pollard in Beijing and Julie Zhu and Kevin Huang in Hong Kong; Written by John Geddy; Editing by Clarence Fernandez

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