China is tweaking its tough COVID-zero approach to the pandemic, days after nationwide protests against the country’s use of unpopular and disruptive lockdowns and mass testing to control outbreaks.
On Wednesday, China Vice Premier Sun Chunlan, who is leading the country’s pandemic response, indicated that the country is “facing a new situation and new tasks” in the fight against COVID. Sun pointed to the lower pathogenicity of the Omicron variant and more widespread vaccination as reasons why China’s COVID policy could be “optimized in small steps.”
The comments from China’s vice premier follow statements from China’s National Health Commission pledging to improve rates of vaccination among the elderly. While China as a whole boasts a 90% vaccination rate, only 69% of those aged 60 or above have received two doses of a COVID-19 vaccine.
Shifting tone
These official statements are some of the highest-level indications that China is considering how to exit from its tough COVID-zero policy, which has frustrated the Chinese public and dragged down the country’s economy.
The shift in tone comes after Chinese residents protested COVID-zero measures across the country, including in major cities like Beijing, Shanghai, Guangzhou and Wuhan.
Chinese cities are also easing their COVID measures. On Wednesday, the southern city of Guangzhou said it would lift lockdown measures across much of the municipality, one day after local residents reportedly clashed with riot police. The same day, officials in Chongqing said they would allow close contacts of confirmed cases to quarantine at home.
Then, on Thursday, city officials in Beijing went one step further by allowing some COVID patients to recover at home, rather than be sent to centralized isolation.
End of COVID-zero?
Taken together, these moves “suggest that an exit of zero-Covid is underway,” writes Larry Hu, Chief China Economist for Macquarie, in a Thursday note—though Hu adds that the “majority of COVID controls” will likely persist in the coming months.
China’s COVID-zero approach uses lockdowns and mass testing to fully suppress outbreaks. These controls have battered the country’s economy, with both retail sales and factory activity shrinking in recent months.
These measures have become more difficult to sustain amid China's most recent COVID outbreak, which is setting daily records for case counts. The country reported almost 35,000 COVID cases on Wednesday, a slight decrease from peaks set over the weekend.
In early November, China slightly eased some COVID measures, including a reduction of inbound quarantine from 10 to eight days of hotel and home quarantine. Goldman Sachs used those signals to give a 30% chance that China would roll back its COVID controls before the second quarter of 2023. (After China's COVID protests over the weekend, the U.S. investment bank noted their prediction included the possibility of a “forced and disorderly” exit from COVID-zero.)
Investors appear to agree that China could reopen sooner rather than later. Hong Kong’s Hang Seng Index is up 6.4% from Friday’s market close. Shanghai’s SSE Composite Index is up 2.1% over the same period.
