[BEIJING] China's surprise decision to clear Pfizer Inc's coronavirus pill for use offers rare insight into how Beijing may be planning to move beyond the "Covid Zero" strategy that is leaving it increasingly isolated.

Paxlovid's conditional approval over the weekend makes it the first foreign pharmaceutical product China has endorsed for Covid-19, with the country until now sticking steadfastly to domestically developed vaccines and therapeutics, even withholding approval for the highly potent mRNA shot co-produced by Pfizer and BioNTech SE.

Pfizer's pill will serve a strategic purpose, said Zeng Guang, a former chief scientist at the Chinese Center for Disease Control and Prevention who advises Beijing on Covid control, told investors in a briefing organised by Sealand Securities Co on Saturday, hours after the approval was announced. The move may lay the groundwork for China's Covid containment regime to gradually give way to a more flexible approach, he suggested, according to a transcript seen by Bloomberg News and confirmed by Sealand.

"China won't self-isolate from the rest of world and has various measures at its disposal to change tack," Zeng said during the event. "Strategising precedes action."

Zeng's takeaway was echoed by experts and analysts familiar with China's virus approach. The country is the last significant economy still trying to eliminate Covid, a task that is becoming increasingly difficult in the face of more transmissible variants like Omicron and Delta. The lower efficacy of China's homegrown vaccines is seen as a key reason behind the ongoing strategy, and having an effective antiviral in its arsenal could help mitigate that disadvantage if the virus was allowed to circulate more freely.

"Hopefully it shows that they're preparing for not having zero cases," said Sophia Archuleta, head of infectious diseases at the National University Hospital in Singapore and an associate professor at the Yong Loo Lin School of Medicine. "If and when Covid becomes more widespread in the community, they have an effective drug they can deploy."

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The conditional approval is an important milestone in the fight against Covid-19 and reflects the government's efforts to increase access to innovative medicine in China, Pfizer said in a statement on Monday.

Paxlovid's approval also eases concern that China, the world's second biggest pharmaceutical market, was actively avoiding foreign treatments for Covid. The Pfizer-BioNTech vaccine, licensed to Shanghai Fosun Pharmaceutical Group Co in China, is still yet to be rubber-stamped for use there, months after an application was submitted. Nearly 90 per cent of the country is now fully vaccinated, and many more are boosted, with the less powerful domestic immunisations.

"A foreign pill for Covid is much less radioactive than approving a foreign vaccine, because vaccines were at the heart of the soft-power race and such a point of national pride," said Michael Shoebridge, director of the defence, strategy and national security programme at the Australian Strategic Policy Institute, a think tank in Canberra.

Statistical modelling by Chinese experts suggests the country could see more than 600,000 infections a day if the current raft of restrictions were lifted, a vision that is difficult to square in a place that has seen less than 5,000 Covid deaths since quelling its first major outbreak in Wuhan. But such an outlook underscores China's need for the Pfizer pill, which has been shown to reduce the risk of hospitalisation and death by almost 90 per cent and would likely lead to less pressure on China's largely untested hospital system.

BLOOMBERG