China signals slight Covid policy easing — but don’t expect sweeping changes yet

Business

Customers dine in at a McDonald’s in Guangzhou on Dec. 1, 2022, a day after the city eased Covid restrictions on restaurant operations.
Yin Hon Chow | CNBC

BEIJING — A trickle of changes around China’s Covid controls in the last 24 hours has raised hopes that broader relaxation is on its way.

Local state media reports and anecdotes indicated Thursday that some people who tested positive for Covid-19 in Beijing might now be allowed to quarantine at home instead of being sent to a centralized facility. It was not clear to what extent these changes applied. 

At a central government level, one notable development is official language downplaying the severity of the Omicron variant.

Vice Premier Sun Chunlan said at a meeting Wednesday that China faces a new Covid situation “as the Omicron variant’s pathogenic nature weakens, vaccination becomes more common and [there’s] an accumulation of experience with Covid prevention and control.” That’s according to a CNBC translation of the Chinese state media report late last night.

Also on Wednesday, the Guangzhou city district hardest hit by Covid said it would allow most restaurants to resume in-store dining, and entertainment venues can gradually reopen.

“We believe Sun’s speech, in addition to the notable easing of Covid control measures in Guangzhou yesterday, sends yet another strong signal that the zero-Covid policy will end within the next few months,” Nomura’s Chief China Economist Ting Lu and a team said in a report Thursday.

“However, restrictions and lockdowns may not truly moderate before March 2023 due to a likely surge in Covid case numbers and disruption, as the current narrative that Omicron is still very deadly has yet to be changed for a majority of Chinese people, especially those in less developed regions,” the report said.

Sun’s description of Omicron followed a comment Tuesday by a Chinese official, citing overseas research, that the share of severe cases and deaths from the Omicron variant are clearly lower than prior variants.

Previously, Sun was one of the toughest public-facing voices on Covid control.

The country’s overall policy and stance remains little changed in name, with an emphasis on making controls more targeted than sweeping.

Mainland China’s daily Covid case count for Wednesday rose to a new record of more than 41,000, including asymptomatic infections. But the number of new infections in Guangdong province fell slightly, albeit still in the several thousands.

Parts of the provincial capital of Guangzhou and the national capital of Beijing said this week that people primarily staying at home don’t need to take regular virus tests. Public venues in Beijing still require proof of a negative virus test from within the last 48 hours in order to enter.

China’s stringent Covid controls initially helped the country return to growth in 2020.

But after the emergence of the more contagious Omicron variant, local authorities tried to control outbreaks with more stringent measures, leading to a two-month Shanghai lockdown that dragged down growth in the second quarter.

Business surveys for November released this week showed an overall contraction in factory activity.

Over the weekend, students and groups of people held public demonstrations across the country to protest the zero-Covid policy. A surge in local infections and extreme controls added to frustrations built up over more than two years.

Nearly three weeks ago, China announced new measures that trimmed quarantine times, among other changes.

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