China readies new COVID rules as investors cheer easing shift

  • New nationwide COVID rules due as soon as Wednesday – sources
  • Shift follows widespread demonstrations last month
  • Yuan companies, global markets rally on China’s hopes

HONG KONG/BEIJING, Dec 5 (Reuters) – China is poised to announce further easing of some of the world’s toughest COVID curbs as early as Wednesday, sources told Reuters, as investors I applaud the prospect of a change in policy that follows the widespread protests and growing economic damage.

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

The austere approach has battered the world’s second-largest economy, put a mental strain on hundreds of millions and last month prompted the biggest show of public discontent in mainland China since President Xi Jinping took power in in 2012.

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

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

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Beijing is also weighing whether to tone down its handling of the virus to reflect the less serious threat it poses as of January, the sources added.

Analysts now predict that China may drop border controls and reopen the economy sooner than expected next year.

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

But last week’s uneven easing has left some in China fearful of being caught on the wrong side of rapidly changing rules.

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

“All we want is to recover at home,” he 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 lifting of pandemic curbs will brighten global growth prospects .

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In another hopeful sign, a source at Apple supplier Foxconn ( 2317.TW ) told Reuters the firm expected its Zhengzhou plant, the world’s largest iPhone factory, hit by COVID, resume full production this month or early next.

The economic data has underlined the damage done by the curbs, as the activity of services has been reduced to the lowest in six months in November.

CHANGE MESSAGE

Alongside the easing in various cities, Vice Premier Sun Chunlan, who oversees China’s COVID efforts, said last week that the virus’ ability to cause disease was weakening.

That change in messaging aligns with the position held by many health officials around the world for more than a year.

In recent days, major cities across China have continued to ease 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 requires negative tests.

“I still can’t feel a very noticeable change,” said Randle Li, 25, a marketing professional in Beijing. He told them that his company also asked him to try every day to go to the office.

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Elsewhere, as testing requirements have 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 accounts were likely underestimating the spread of the virus due to lower testing rates.

While last week’s protests have subsided, frustration can still boil over, as events in the central city of Wuhan, where the virus first appeared in late 2019, showed this weekend.

On Saturday, people tore down barriers in an apparent attempt to break through a blockade at a garment industrial park, video clips posted on Twitter showed.

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

Reuters was able to verify that the incidents occurred 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; Editing by Clarence Fernandez

Our standards: Thomson Reuters’ principles of trust.

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