China readies new Covid-19 rules as investors cheer easing shift

BEIJING – China is set to announce the further easing of some of the worlds toughest Covid-19 curbs as early as Wednesday, sources told Reuters.

Three years into the pandemic, Chinas zero-tolerance measures, from shut borders to frequent lockdowns, contrast sharply with the rest of the world, which has largely decided to live with the coronavirus.

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

Last months protests largely subsided amid a heavy police presence across major cities.

But regional authorities have since cut back on 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 nationwide rules are due 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 down its management of the virus to reflect the less serious threat it poses as early as January, the sources added.

Analysts now predict China may drop border controls and re-open the economy sooner 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 such a reopening from April. Other analysts expect a reopening in the second half.

But the patchy loosening over the past week has left some in China scared of being caught on the wrong side of fast-changing rules.

Yin, who lives in a small city near Beijing, said her in-laws had come down with a fever and she had a sore throat but they did not want 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 unwinding of pandemic curbs will brighten the outlook for global growth.

In another hopeful sign, a source at Apple supplier Foxconn told Reuters the firm expected its Covid-hit Zhengzhou plant – the worlds biggest iPhone factory – to resume full production this month or early next. REUTERS More On This Topic Economists see faster reopening in China as Covid-19 curbs ease Beijing, Shenzhen loosen more Covid-19 curbs as China fine-tunes policy