Shanghai eases Covid-19 curbs

• Financial hub joins other major cities in loosening rules after recent anti-lockdown protests across the country

Shanghai has eased some of its Covid restrictions, joining other top-tier Chinese cities as authorities accelerate a shift towards reopening the economy after thousands of demonstrators took to the streets last weekend to voice their anger.

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

The financial hub will scrap PCR testing requirements to enter outdoor public venues such as parks or use public transport effective from Monday, city authorities said on Sunday. Measures will “continue to be optimised and adjusted” in line with national policy and the situation, according to the statement.

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

Rapid unwinding of requirements has led to a sharp drop in the number of testing booths in some cities, causing unusually long queues. Authorities in Beijing’s Chaoyang District, one of the Chinese capital’s worst-hit areas in the present outbreak, said on Saturday they were “deeply sorry” for inadequate co-ordination that led to excessively long waiting times, and they restored some sites.

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 rallied recently, fuelled by rising signs that China is softening its pursuit of zero Covid. The Hang Seng China Enterprises Index surged 29% 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 economy.

Investors are increasingly seen shifting their bets to longerterm plays such as consumer and health-care equities, from travel and catering firms whose shares have jumped sharply.

Restrictions were also eased in a number of provincial capital cities at the weekend. Kunming, in the southwestern province of Yunnan, allowed people from Sunday 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 northeast, 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.

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

Suspicions that Covid restrictions hampered rescue efforts in the fire in a high-rise building in the capital city of the Xinjiang region fuelled public anger, helping spread protests across the country as people gathered to 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.

CLEAR EVIDENCE ... THE GOVERNMENT IS PREPARING FOR AN EXIT, AND TRYING TO MINIMISE ECONOMIC AND SOCIAL COSTS OF COVID CONTROL

Experience in Hong Kong and Taiwan indicated new cases will skyrocket on reopening, with mobility falling 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 not to take PCR tests, while those that need can take paid tests, CCTV reported, citing a government notice. People travelling from elsewhere can take a voluntary test on arrival but no quarantine is required.