ANALYSIS-For China’s COVID policy, change comes in small increments

By Tony Munroe

BEIJING, November 6 (Reuters)China is sticking to a strict COVID-19 containment strategy nearly three years into the pandemic, potentially disappointing investors hoping for a quick reopening, though authorities are making continued, albeit modest, changes to virus management.

Many analysts and experts say China is unlikely to begin any significant easing of its aberrant zero COVID approach, which is squeezing the economy and fueling widespread frustration, before an annual parliamentary session in March — at the earliest.

Authorities are making changes such as more precise targeting of lockdowns, rolling out new vaccines and adding international flights. But they have not taken measures, such as a major new vaccination campaign or preparing the public for the possibility of a spike in infections, that would allow for a significant easing of restrictions.

Chinese stocks surged 5.3% last week, the biggest weekly gain in more than two years, as investors pumped a trillion dollars into the market on the hope of a reopening in the world’s second largest economy.

But on Saturday, Chinese health authorities reiterated their commitment to a “dynamic compensation“an approach that has been described as ‘completely correct, as well as the most economical and efficient’.

Daily infections, though extremely low by international standards, are hitting six month highs, while officials repeatedly reaffirm the zero COVID policy which President Xi Jinping says saves lives. China has not reported any COVID deaths since May 26.

The challenge of reopening China remains managing the potential impact of the widespread spread of the coronavirus, even milder variants, among its 1.4 billion people, including hundreds of millions of elderly people, with few natural immunity.

Julian Evans-Pritchard, senior China economist at Capital Economics, said a move away from zero-COVID is unlikely even in 2023, citing relatively low vaccination rates among the elderly among other factors.

“Hong Kong’s experience highlights the risk of reopening prematurely,” he wrote in a Friday note, pointing to that city’s extremely high COVID death rate.

“A similar outcome on the mainland would hurt Xi Jinping personally: he took credit for keeping China’s death toll much lower than the rest of the world,” he said. “The lack of official action to address this vulnerability suggests there is no urgency to change course.”


The evolving battle against COVID is focused at the local level, where authorities are keen to avoid total shutdowns like the one that paralyzed Shanghai, China’s financial capital and most populous city, for two months this year.

Residents of many cities, including Beijing, are being tested frequently and run the constant risk of being deemed a ‘contact’ of a case or having their mobile health app go ‘abnormal’ – forcing them to stay at home.

Localized lockdowns are common and domestic travel is down sharply from a year ago.

On Saturday, health officials slammed some regions for “one-size-fits-all” shutdowns, promising efforts to address those shortcomings.

“There seems to be a growing trend at the local level to emphasize a more targeted approach in implementing zero COVID,” Yanzhong Huang, global health specialist at the Council on Foreign Relations, said on Friday.

Still, Huang doesn’t expect a fundamental shift in China’s COVID policy anytime soon. “This political pivot will not happen overnight. And if it does, it will be gradual,” he told Reuters from New York.


Around the edges, there have been other adjustments, some of which have been seized upon by investors as grounds for optimism.

An article last week in the ruling Communist Party’s official People’s Daily, in part titled “Experts say COVID for most people is short-term, symptoms mild,” sparked a buzz on social media for downplaying the severity of the disease.

The city of Zhengzhou has also played down the dangers of COVID, after a lockdown at a sprawling Foxconn factory that assembles Apple iPhones led many workers to scale fences to escape being locked down or catching the virus.

“COVID is not scary, it is preventable and treatable,” the city’s health authority told residents.

China recently began rolling out what is believed to be the world’s first inhalable COVID vaccine, which could help reduce vaccine hesitancy that is particularly prevalent among older Chinese.

On Friday, German Chancellor Olaf Scholz – in the first post-COVID visit to China by a G7 leader – announced a deal to allow expats in China to use the vaccine from German BioNTech and pushed for that Beijing authorizes the free availability of the vaccine for Chinese citizens.

China had not yet approved any foreign COVID vaccines.

International flights up: Daily international flights last month on Chinese airlines were up 21.9% from September on average, according to Variflight. Yet international capacity is only 7.3% of 2019 levels, according to data from CAPA and OAG.

China may soon shorten Quarantine against covid requirements for inbound travelers from 10 days to seven or eight days, people familiar with the matter told Reuters on Friday.

Bloomberg News said China was working to scrap a system that penalizes airlines for bringing in COVID-positive passengers, citing people familiar with the matter, saying the effort was a sign authorities were looking for ways to mitigate the impact of its COVID policies.

None of these moves would be a game changer.

“The government still thinks it is doing a good job of balancing economic development and controlling COVID,” Huang told the Council on Foreign Relations.

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(Reporting by Tony Munroe; Additional reporting by Martin Quin Pollard; Editing by William Mallard)

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