🏥Shortened quarantines, scrapped flight bans: China's refining of COVID rules bolsters market expectations
Why did the adjustments come at this point and what are their repercussions?
China has recently announced multiple relaxations of its strict anti-COVID measures, including shortening quarantines for close contacts and inbound travelers, as well as removing restrictions for international flights.
Some mistook the adjustments as an about-face toward "lying flat" or doing nothing in the fight. But based on the circular issued by the State Council joint prevention and control mechanism against COVID-19, China has tenaciously pursued the general policy of "dynamic zero-COVID."
"These adjustments have been made based on the way the virus variates, so they are scientific and necessary," said Zhao Lijian, China's Foreign Ministry spokesperson, at a press conference.
"I believe they will facilitate cross-border travels and provide foreign businesses with more convenience to invest and thrive in China," he said.
Major changes for inbound travelers are:
Hotel quarantine will be cut to five days from seven.
Only requiring one negative PCR test within 48 hours of boarding a flight to China instead of two.
Raising the threshold for counting a PCR test as positive.
Key domestic changes:
For close contacts, centralized quarantine is cut to five days from seven, with three days of home isolation.
Secondary contacts — that is, close contacts of people labeled close contacts of positive cases — will no longer have to undergo quarantine or medical surveillance.
Residents traveling from high-risk areas to other parts of the country will no longer have to spend seven days in quarantine and instead can spend the same period in home isolation.
The government will crack down on arbitrary lockdowns and punish those responsible.
Markets responded positively to the loosening of restrictions after it was announced last Friday, with Hong Kong's Hang Seng Index surging 7 percent shortly after midday break. The Chinese mainland's benchmark Shanghai Composite Index rose as much as 2.69 percent during the day.
Chinese currency also soared despite recent depreciation pressure, with the offshore yuan touching a high of 7.0592 per dollar on the day, its strongest in over a month.
The announcement was particularly applauded by sectors ravaged the hardest by the virus.
Data from Chinese travel platform Qunar showed search volumes for international flights tripled as of Friday afternoon from a day earlier, and kept rising. Similar surges were also seen in other travel service providers such as Ctrip.
According to the adjusted rules, quarantine time for inbound travelers was reduced to five days at a centralized location plus three days of isolation at home, from the previous "seven-plus-three" pattern.
The "circuit breaker" mechanism, which suspended international flights with too many infected passengers, was abolished. For inbound travelers, the pre-departure COVID test requirement was cut to once in 48 hours from twice.
Zhang Zhining, a senior analyst from Ctrip's research institute, said that the relaxations would increase regional population mobility over time and bring a "tipping point" to sectors such as civil aviation and tourism.
“The fine-tuning of the COVID policy is likely to bolster China's autumn-winter tourism, and more importantly, send a positive signal to the recovery and development next year.”
—— Zhang Zhining (Senior Analyst)
On the civil aviation front, Zou Jianjun, a professor at the Civil Aviation Management Institute of China, said at a Saturday symposium that the move to trim quarantines for those working at high-risk posts would mitigate the current supply shortages of available civil aviation workers, thereby reducing burden on management as well as practitioners' mental stress in the industry.
Mass sports events have been rare in China since the virus broke out in 2020, but changes seem to be underway. Earlier this month, thousands of runners took to the streets of the Chinese capital for the return of the Beijing marathon after a two-year hiatus.
For business people and sports teams, the revised rules introduced a "bubble" mechanism, which means that after arriving in China, these people or groups will be transferred "point-to-point" to closed-loop management areas for business, training and other activities, and will be exempted from quarantine.
At least 13 marathons are scheduled across China this month, with a Shanghai race arranged for November 27. This will be the international financial hub's first major sporting event since its over two months-long Q2 lockdown, which weighed heavily on China's economy.
With China optimizing its anti-COVID measures, the momentum for production and demand will be unleashed, and economic activities are likely to pick up, said a recent research report from the China International Capital Corporation.
The latest data has showed that the Chinese economy is recovering from the Q2 trough, with several economic indicators pointing to an upturn.
The value-added industrial output, for instance, rose 5 percent year on year in October, 0.2 percentage points higher than that of the third quarter, according to the National Bureau of Statistics.
Looking forward to how the revised rules will work, Chang Jile, deputy head of China's disease prevention and control agency, told a Saturday press conference that the fine-tuning of the COVID policy requires relevant government departments to work in a more "scientific, standardized and efficient" manner, so as to "coordinate epidemic prevention and control with economic and social development".
"We implement rules worth implementing, and we must eliminate unnecessary ones."
—— Chang Jile (deputy director of the National Administration of Disease Prevention and Control)