Hong Kong giving up on ‘COVID Zero’ as Beijing avoids Shanghai-style lockdown

There’s renewed optimism in Hong Kong and China’s mainland with relief from strict COVID-19 containment measures just days away.

In Hong Kong, reopening plans have been expedited, with Chief Executive Carrie Lam on Tuesday announcing a surprise move to drop mask requirements while exercising and permit the reopening of beaches, pools and leisure centres from Thursday this week.

Lam also announced a second phase of relief would come in effect on May 19, when residents will be allowed to dine-in at restaurants until midnight and bars will be able to stay open until 2 a.m.

While Hong Kong’s Government still publicly endorses the Mainland’s COVID Zero strategy, observers believe this relaxation of containment measures shows it is bowing to intense pressure from the business community to reopen the city.

Financial institutions in Hong Kong including Bank of America, JP Morgan, Goldman Sachs and Credit Suisse have sent Hong Kong-based staff to work from offices in other cities in the Asia Pacific, including Singapore and Sydney.

Ms Lam had previously said the Government would consider easing restrictions in late May.

No lockdown for Beijing

On China’s mainland, thousands of Shanghai residents have this week been allowed to leave their apartments for the first time in over a month as local authorities announced an easing of restrictions in five of the city’s 16 districts. Asia Markets understands up to five more districts may also have restrictions eased before the end of this week.

However, many areas still remain under extremely strict control.

In the capital though, the Government appears to be pulling out all stops to stave off a full-scale lockdown.

This week the China National Exhibition Center has been converted into a 10,000-bed mass isolation centre, while the Government has refurbished the 1,000-bed Xiaotangshan Hospital to help cope with any increase in cases. The Xiaotangshan Hospital was built in 2003 during the SARS outbreak.

This city’s restaurants and gyms have now been closed for the May Day national holiday, while schools remain closed indefinitely.

Mass testing is also continuing, with 21 million people ordered to undertaken three rounds of testing from today. A negative test result is required to gain entry to most public places.

Investors remain optimistic on China growth

Despite the continuing interruptions to China’s economy caused by its Government’s harsh COVID polices, investors have been buoyed by signs that an end could now be in sight.

“I still expect that a rebound from COVID and more policy support should lead to strong growth in the second half of the year, ” said Invesco Chief Global Market Strategist, Kristina Hooper.

“It is clear that in March, COVID lockdowns impaired consumption, and that situation is only getting worse. In this environment, I wouldn’t be surprised to see China’s second-quarter gross domestic product (GDP) disappoint. However, that does not change my far more positive view of the back half of 2022.”

Just 62 new COVID-19 infections were reported in Beijing on Tuesday. Across China, 6,015 new infections were recorded – 95 per cent of them in Shanghai.