Dec 7 (Reuters) – China on Wednesday announced the most sweeping changes to its strict zero COVID policy since the pandemic began three years ago, easing rules that had curbed the spread of the virus but had hobbled the world’s second-largest economy worldwide and sparked protests.
The easing of rules, which include allowing infected people with mild or no symptoms to self-quarantine at home and dropping testing for people traveling within the country, are the strongest signs to come. this day that Beijing prepares its 1.4 billion inhabitants to live with the disease.
Here’s what people are saying about the latest moves to ease COVID restrictions in China:
CHI LO, SENIOR MARKET STRATEGIST, ASIA PACIFIC, BNP PARIBAS ASSET MANAGEMENT, HONG KONG
“Obviously, the consumer sector will benefit the most, but also the service sector and industries that involve human contact and travel, will also benefit significantly.
“Together with government consumption, total consumption could push GDP growth in 2023 well above the current consensus forecast of 4%.”
REDMOND WONG, GREATER CHINA MARKET STRATEGIST, SAXO MARKETS, HONG KONG
“The 10 new measures are disappointing, given the high expectations. I would say the reading of the Politburo meeting is more noteworthy because it makes no mention of the ‘zero-Covid momentum’ policy.
“Instead, it says China will strive to better coordinate pandemic prevention and control with socio-economic development and continue to optimize the country’s pandemic control measures.”
HYOMI JIE, PORTFOLIO MANAGER, FIDELITY INTERNATIONAL, SINGAPORE
“While the direction of reopening is clear, it is important to monitor how things will zigzag…if cases are to break out, the impact needs to be considered in great detail.”
GARY NG, ECONOMIST, NATIXIS, HONG KONG
“The latest announcements show that China is determined to accelerate its reopening due to economic pressure. It is likely to see cyclical upswings in business climate due to demand suppression, especially in sectors heavily affected by covid restrictions.
“This means China will experience a rebound from 3% in 2022 to 5.5% in 2023 in GDP growth, which is a rare market with faster expansion next year but with a weak base effect. However, this does not mean that everything will be fine again. right away because zero-COVID has left a scar on consumer and business confidence that will take longer than 2020 to repair itself this time. »
FRANK BENZIMRA, HEAD OF ASIAN EQUITY STRATEGY, SOCIÉTÉ GÉNÉRALE, HONG KONG
“MSCI China has rebounded well, valuations have risen and can normalize very gradually. Markets will be wondering how the normalization of growth will occur.
“If China’s reopening were to start a new global cycle, we would see the US curve steepen and US Treasuries (yields) rise, which is not happening. Don’t rush into the open.”
KEN CHEUNG, ASIAN FX CHIEF STRATEGIST, MIZUHO, HONG KONG
“Recent government policy is in line with market expectations to accelerate China’s reopening…but I think restrictions will still exist and there will still be a lot of restrictions on mobility, so I think it’s far from a full reopening.
“The next checkpoint will be Chinese New Year; I think the markets are looking for additional easing to make it easier to return to their hometowns by Chinese New Year.”
MITUL KOTECHA, HEAD OF EMERGING MARKETS STRATEGY, TD SECURITIES, SINGAPORE
“These are important steps, and the reality is that the current policy has become very difficult to administer given the extent of COVID in the country. This is tipping the balance of growth risk to the upside.
“But some of that is already in the price. Now we’ll have to wait and see (and) how it’s executed. The reality on the ground is still one of continued pressure, even if the outlook improves somewhat .”
ZHIWEI ZHANG, CHIEF ECONOMIST, PINPOINT ASSET MANAGEMENT, HONG KONG
“This policy change is a big step forward. In particular, the home quarantine policy will help reallocate resources to focus on treating patients with severe symptoms and patients in need of treatment other than COVID.
“The new policy pushes China’s reopening process ahead of market expectation. In line with the message from today’s Politburo meeting: to build market confidence. I expect China to fully reopens its border no later than mid-2023.
“The quarantine requirement for international travelers will likely soon be shortened. The key issue in the coming months is to keep hospitals operating and to rapidly increase the vaccination rate for the elderly.”
SAKTIANDI SUPAAT, REGIONAL HEAD OF FX RESEARCH AND STRATEGY, MAYBANK, SINGAPORE
“I think the markets have, in some ways, priced in that element (of further easing).
“I think the markets are probably expecting more from the opening up of the economy… and are probably still worried about the possibility of policy reversals if they don’t… see infections actually go down, and also whether the authorities will be able to control epidemics.
NAKA MATSUZAWA, HEAD OF JAPAN MACRO STRATEGY, NOMURA, TOKYO
“It sounds more like noise than a game changer. I mean, it is better for China to deregulate its COVID restrictions but even if it is a stimulus for the Chinese economy and commodity prices, it will work negatively for a Fed pause as it tightens monetary conditions.”
“The most important thing (for investors around the world) is the Fed’s pause, and if markets are starting to see the slowdown as bad news instead of good news, then Chinese deregulation really doesn’t change anything. to that.”
Reporting by Tom Westbrook and Rae Wee in Singapore, Xie Yu and Selena Li in Hong Kong, Kevin Buckland in Tokyo, Scott Murdoch in Sydney; Compiled and edited by Sumeet Chatterjee & Shri Navaratnam
Our standards: The Thomson Reuters Trust Principles.
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