China’s abrupt U-turn on Covid Zero has upended economists’ and investors’ expectations
China will no longer subject inbound travellers to quarantine from January 8, putting the country on track to emerge from three years of self-imposed global isolation under a Covid Zero policy that battered the economy and stoked historic public discontent.
People arriving in China will only be required to obtain negative Covid test results within 48 hours of departure, according to a statement from the National Health Commission Monday. That compares with the current requirement of eight days isolation – five days at a designated quarantine hotel, or central facility, followed by three days at home.
The government said it will facilitate visa applications for foreigners who need to travel to China for everything from businesses and studies to family reunions, while outbound tourism, which dwindled to almost nothing during the pandemic, will resume in an orderly fashion. Current limits on the number of international flights between China and the rest of the world and passenger capacity will also be removed, according to the statement.
The country also downgraded the management of Covid from the top level to the second highest, effectively removing the legal justification for aggressive Covid Zero restrictions. Still, the National Health Commission said it will continue to monitor the virus’s spread and vowed to take appropriate measures to suppress the peak of Covid outbreaks.
“Our priority now needs to change from preventing and control infection to treatment, with the goal of ensuring health, preventing severe disease and enabling a stable orderly transition as we adjust our Covid response,” Liang Wannian, a senior health official overseeing China’s Covid response throughout the pandemic, said in an interview with People’s Daily on Tuesday.
The Chinese Center for Disease Control and Prevention may also reduce the frequency of reporting cases, ultimately changing to a monthly report from the current daily publication, Li Qun, a China CDC official, said.
Chinese stocks extended gains for a second day, with the CSI 300 Index rallying as much as 0.9% on Tuesday. Shares of companies related to travel and consumer goods climbed in Japan and South Korea after China moved to end quarantine for inbound visitors.
Since late November, when discontent with harsh Covid Zero rules boiled over and sparked protests in cities across the country of 1.4 billion, officials have rapidly dismantled many of their harshest pandemic measures. The speed of change has left health experts puzzled and residents scrambling to adjust to a new way of life that’s seen infections explode and made the border curbs – put in place to keep the virus out of China – increasingly irrelevant.
The Health Commission also said China will enhance the treatment of severe patients by boosting the supply of life-saving medical devices, such as ventilators, and the capacity of intensive care units. It will also repurpose quarantine facilities into hospitals for treating Covid patients. The country has already ramped up the share of ICU beds from less than 4 per 10,000 people to 10.6 in about a month time while another 70,000 beds across the country can be converted for intensive care, Jiao Yahui, a senior NHC official overseeing hospitals said in a separate People’s Daily interview published on Tuesday.
In another sign of downgrading the impact of the virus, the government changed the Chinese name of Covid-19 from “new coronavirus pneumonia” to “new coronavirus infections.” Omicron’s much reduced virulence compared to the ancestral strain that emerged from Wuhan means most people are sickened with only mild upper respiratory tract infections, authorities said.
“The new coronavirus will linger in nature for a long time to come,” according to the statement. “It has become much less virulent than before and the disease it causes will gradually turn into a common respiratory disease.”
The world’s second-largest economy has been largely cut off since early 2020, when China first imposed a blanket ban on overseas travelers. While it later lifted the outright restriction, it kept in place an intricate web of testing and bureaucratic requirements around international flights that discouraged most travelers and effectively kept it sealed off from the world.
Easier travel into and out of China is likely to benefit the many countries across the globe that rely on Chinese tourists. And the recent loosening of testing and isolation requirements for travel within China may also boost domestic tourism revenue, which declined 26% over the week-long National Day holiday in October, compared with the same period last year.
China’s abrupt U-turn on Covid Zero has upended economists’ and investors’ expectations, complicating estimates for how its policies will affect economic growth.
While there’s likely to be substantial short-term headwinds as cases increase and residents frequently stay at home, disrupting a raft of activities, the policy shift paves the way for a fuller recovery once the first major wave of infections passes. China has pledged to revive consumption and support the private sector in 2023, and economists have said signals are clear that the focus is on boosting gross domestic product, with policy makers likely to target growth of 5% or higher.
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