China COVID restrictions EASED, Chinese stocks soar: Is Zero-COVID over?
China’s COVID restrictions have sensationally been eased, after weeks of speculation about the end of the nation’s extreme Zero-COVID policy.
The Chinese National Health Commission announced the changes on Friday. They are the most significant changes to the country’s virus containment policy to date, and will affect both Chinese residents and travellers.
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For travellers, the Commission said it will allow the recommencement of inbound international flights that were previously suspended due the virus, cut the number of days arrivals will need to be in hotel quarantine time from seven days to five, and end requirements for travellers to do multiple PCR tests.
For Chinese residents, the time ‘close contacts’ must spend in quarantine facilities is being slashed, while residents in “high-risk” areas will now be allowed to quarantine in their homes rather than government facilities, as was previously required.
The policy shift comes after the new Politburo Standing Committee met on Thursday and announced it would seek a more “targeted approach” to manage COVID-19 and limit further economic disruption.
It also comes just days after German Chancellor Olaf Scholz met with Xi Jinping in China. The pair reached an agreement that will see the German-developed BioNTech COVID-19 vaccine approved for use by foreigners in China, with approvals likely to be extended to broader population in the near future.
China COVID restrictions rhetoric changing
The author of the China Macro Watch newsletter, who’s goes by the Twitter pseudonym of Shanghai Macro Strategist, sparked rumours of the easing of Zero-COVID some two weeks ago.
He says a change in rhetoric from Chinese social media influencers is a significant signal.
“It is very interesting that an increasing number of pro-CCP onshore influencers have voiced against sticking to zero-covid policy over the past few days, suggesting that Beijing may have started the media campaign to shift the domestic narrative.
“For example, mega-influencer Lu Kewen published an article yesterday titled “Russia-Ukraine war and zero-covid policy are both coming to an inflection point.”He explicitly stated that “Given that we cannot close the country forever, the new covid strategy may be adjusted soon.”
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Chinese stocks soar
China’s CSI 300 index ended the week up just shy of 8%, while the Hang Seng China Enterprise Index finished the week up 8.3%.
“Linear extrapolation of policy is folly. Serious investors should eye on marginal changes and dissect the underlying logic/constraints. Investors should never be guided by sentiment or ideology,” said Shanghai Macro Strategist.
Top Chinese stock gainers in Hong Kong trading this week include:
- JD.com (HKG: 9618) +14%
- Tencent Holdings (HKG: 0700) +10.4%
- Bilibili Inc (HKG: 9626) +10%
- Meituan (HKG: 3690) +9.6%
- Baidu Inc (HKG: 9888) +6.8%
- Alibaba Group (HKG: 9988)+ 6.23%