On Friday, Nov. 11, the Chinese government began easing its strict zero-Covid policies. However, leaders of the Chinese Communist Party (CCP) say that the “war” against the pandemic will persist.
“We must maintain our strategic determination and conduct epidemic control properly and with scientific precision,” the National Health Commission of the People’s Republic of China said.
Domestically, a few minor changes were implemented. The government reduced the quarantine time from seven to five days, but three days of isolation is still required. China will also stop identifying close contacts of close contacts. Next, those traveling from high-risk parts of the country will not have to spend a week in quarantine; instead, they can do so in home isolation. Finally, the government claims it will punish those responsible for any continued “arbitrary lockdowns.”
For international travelers arriving in China, hotel quarantines are cut from a week to five days. In addition, the government now requires only one negative PCR test instead of two within 48 hours of boarding a flight into China.
These announcements came as a surprise, as on Thursday, Nov. 10, the CCP reported that there were 10,535 new cases transmitted domestically, according to NPR. This was the highest number of cases reported in months.
However, this move is likely in response to China’s weakened economy, burdened by the costs of the zero-Covid policies, including the strict lockdowns and travel restrictions. As a result, people have not been spending money on goods and services, which has mounted immense pressure on major industries.
The Hang Seng Index in Hong Kong soared upon the news of the relaxed restrictions, having its largest one-day gain in eight months. In addition, travel-related stocks, such as Air China and China Eastern Airlines, rose after the announcement.
These measures were unveiled ahead of the Chinese New Year—which begins in about two months. This is one of the most popular travel periods in China. However, according to Reuters, the country is focused on restoring international travel from 2023 to 2025.
Many economic analysts warn that this market rally will not last, as the government did not wholly end its Covid restrictions.
“Some interpretations are being too optimistic,” Chief economist for Greater China at Jones Lang LaSalle Bruce Pang said. “The Covid policy will only be fine-tuned in the short term, with the focus shifting between eliminating cases and making more precise measures.”
Reuters polls predicting 2022 economic growth reveal that China is on track to miss its target of 5.5%, likely achieving only 3.2%.
Some analysts once believed China would outpace the U.S. by 2030 to become the largest global economy. Now, however, many experts are saying otherwise. Its technology sector has been hit hard by the Covid crackdown, which has caused stocks, such as Chinese multinational technology company Alibaba, to plummet.
If the CCP wants continued economic growth, it will likely have to end its restrictive Covid policies.
