Shanghai eases Covid curbs as China’s policy shift expands

SHANGHAI eased some of its Covid restrictions, joining other top-tier Chinese cities as authorities expand a shift towards reopening the economy after thousands of demonstrators took to the streets of the city last weekend to voice their anger at China’s Covid policies. 

The financial hub will scrap PCR testing requirements to enter outdoor public venues such as parks as well as ride public transit effective on Monday (Dec 5), the city said in a statement on Sunday afternoon. Measures will “continue to be optimised and adjusted” in line with national policy and the situation, added the statement. 

Shanghai, which had a gruelling two-month lockdown earlier in the year, joins other Chinese metropolises such as Beijing, Shenzhen and Guangzhou in relaxing curbs in recent days. Top government officials in the past week have signalled a transition away from the harshest containment measures, which have weighed on the economy and triggered anti-lockdown protests as public discontent grew. 

China reported 30,889 new local Covid cases on Saturday, down from 32,206 the day before, according to the latest official data. 

Chinese stocks have rallied recently, fuelled by rising signs that China is softening its pursuit of Zero Covid.

The Hang Seng China Enterprises Index surged 29 per cent in November, capping its best month since 2003, while the benchmark Hang Seng Index posted its biggest monthly gain since 1998. The rally was mainly driven by the gains in airlines, casinos, restaurant operators and other stocks expected to benefit from a reopening of the world’s second-largest economy. Investors are increasingly seen shifting their bets to longer-term plays such as consumer and healthcare equities, from travel and catering firms whose shares have jumped sharply. 

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

A number of provincial capital cities also announced they would relax restrictions over the weekend. Kunming, in the south-western province of Yunnan, will as of Sunday allow people to ride public transport without showing a PCR test, while Nanning in the neighbouring Guangxi region scrapped such testing requirements for all public venues except hotels and tourist destinations. 

In Harbin, the capital of Heilongjiang in the north-east, test results are no longer required to enter public places, while people leaving the city only need to take one PCR test within 48 hours instead of two, the local government said late on Saturday. 

In Urumqi, where a fire that killed more than 10 people last month triggered anti-lockdown protests, skiing venues and a pedestrian street have reopened on Sunday, said state broadcaster CCTV. Hotels, restaurants, supermarkets and entertainment businesses such as gyms will also resume normal operations on Monday as conditions are now ripe for “normalised” Covid containment measures, according to the CCTV report that cited a local government briefing on Sunday.

Suspicions that Covid restrictions hampered rescue efforts in the fire at a high-rise building in the capital city of the far western Xinjiang region fuelled public anger, helping spread protests to other parts of the country as people gathered to commemorate the victims and request an end to Covid curbs.

While the easing measures in cities cannot be interpreted as China abandoning its Covid Zero policy yet, “we see them as clear evidence of the Chinese government preparing for an exit, and trying to minimise the economic and social cost of Covid control in the meantime”, Goldman Sachs Group’s chief China economist Hui Shan and colleagues wrote in a note on Sunday. 

Experiences in Hong Kong and Taiwan showed that new cases will skyrocket upon reopening, with mobility declining sharply, they wrote. Goldman Sachs’ base case scenario suggests China’s Covid Zero policy will stay until April to allow for preparations, according to the note. 

In Zhuhai, another city in Guangdong, residents who have no Covid symptoms or high exposure risks are advised to not take PCR tests while those who need to can take paid tests, CCTV reported, citing a government notice. People travelling from elsewhere can take a voluntary test upon arrival but no quarantine is required. BLOOMBERG