Despite announcements of increased contagions in several regions of the country and strict COVID measures, the Chinese Communist Party is relaxing some of those restrictions. However, the “zero-COVID” policy remains in place throughout the country and a new dynamic will be adopted.
The COVID-19 policy team reported the reduction of quarantine days for foreigners, such as requirements for people who have close contact with people who test positive. And unannounced flight cancellations will also end when international passengers from previous flights tested positive for COVID upon arriving in China.
A representative for China’s National Health Commission said, “Optimizing and adjusting prevention and control measures is not relaxing prevention and control, let alone opening up and ‘lying down,’ but adapting to the new pandemic prevention and control situation and the new characteristics of the COVID-19 mutation,” said a spokesperson for China’s National Health Commission.
A new measure, which will lessen the impact of the “zero-COVID” policy on enterprises, allows factories and companies to continue production even if there are declared local outbreaks. The Chinese regime intends to maintain the stability of the supply chain. State-owned television channel CCTV announced, “Arbitrary school closures and cancellation of classes, suspension of work and production, disruption of traffic without approval, arbitrary silent management, arbitrary closure and control, and closure of health clinics are prohibited.”
Mandatory quarantine in centers will be changed to home quarantine and citizens with positive results will not be allowed to leave their homes until the green health code is restored.
The quarantine reduction time for foreigners and Chinese returning from abroad means that passengers must carry out all their activities in a closed circuit, without any contact with residents. Previously, foreigners had to spend 5 days in quarantine in a center, now they will have to spend 3 days in their residence and wait for the government to authorize their departure through the health code.
Following the announcement of these measures, some stock indexes rose, such as Hong Kong’s Hang Seng index, which jumped more than 7%, and the yuan strengthened against the dollar.
Easing the restrictions comes after Xi Jinping held a meeting with the Politburo Standing Committee on COVID-19 and is a signal to foreign markets. However, analysts and experts in China commented that these new measures would not be enough.
Zhang Zhiwei, chief economist at Pinpoint Asset Management said, “The new policies are encouraging. They help clear policy uncertainty for next year and will likely help raise market expectations for economic growth next year.”
He concluded his remarks adding that the policies increase investor and general public confidence. And they indicate that the government intends to move toward reopening the economy, although the exact timeline is still unclear at this stage.”
Flight bookings doubled compared to the previous week and searches for international flights increased 200 percent.
Dan Wang, chief economist at Hang Seng Bank China said, “The stock market responded positively, reflecting the expectation of a gradual easing of COVID restrictions in the coming months.”
However, the effects of the “zero-COVID” changes may take time to be reflected in the Chinese economy.
In addition, local governments face a trade-off between following strict measures during the outbreaks and the demands of the communist regime.
On the one hand, the CCP requires local governments to contain omicron outbreaks, and on the other hand, it punishes those who apply the measures “too” strictly. According to CCP regulations, local authorities have the power to execute their own orders in matters of community health, which is one of the reasons why draconian, extreme ,and excessive measures have been replicated in several regions.
However, with these new measures from the Politburo Standing Committee, where Xi decided that he will “firmly implement the overall zero-dynamic [Covid] policy,” it will be a matter of time to see if they will impact local governments and contain the pandemic.
Apparently, Xi’s new instructions are aimed at rescuing the economy as quickly as possible and signaling to foreign markets a change of course in the “zero-COVID” policy.
According to Standard Chartered Bank’s chief China economist, Ding Shuang, “At present, the overall economic trend is still weak. He added, “Of course, policy changes can boost confidence, but to improve investment and consumption, it is necessary to gradually loosen more in the future, and then the real effect will gradually appear.”
The British Chamber of Commerce in China told the South China Morning Post, “Over the past six months, we have received reports of reduced centralized quarantine times and the like, however, in reality there often seems to be a considerable delay between the announcement of such relaxations and the implementation, as well as a noticeable gap between what is announced and what is actually implemented.”
Several analysts of China’s political situation pointed out that “dynamic” zero COVID measures are not enough and that a broader economic reopening is needed, which will not happen until the next CCP National People’s Congress, which would be held in March 2023.