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China prepares new COVID rules as investors applaud softer change

China prepares new COVID rules as investors applaud softer change
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  • New nationwide COVID rules for Wednesday: sources
  • The change follows widespread demonstrations last month.
  • Yuan firms, global markets rally on China hopes

HONG KONG/BEIJING, Dec 5 (Reuters) – China will announce further relaxation of some of the world’s toughest COVID restrictions on Wednesday. sources told Reutersas investors cheer the prospect of a policy change following widespread protests and mounting economic damage.

Three years into the pandemic, China’s zero-tolerance measures, from border closures to frequent lockdowns, stand in stark contrast to the rest of the world, which has largely chosen to live with the coronavirus.

The strict approach has battered the world’s second-largest economy, strained the minds of hundreds of millions and last month sparked the biggest outpouring of public discontent in mainland China since President Xi Jinping took power in 2012.

Although last month’s protests largely subsided amid a heavy police presence in major cities, regional authorities have since eased lockdowns, quarantine rules and testing requirements to varying degrees. Senior officials have also softened their tone on the dangers posed by the virus.

A new set of rules will be announced nationwide soon, two sources with knowledge of the matter said, paving the way for more coordinated relaxation.

Beijing is also considering whether to scale back its management of the virus to reflect the less severe threat it has posed since January, the sources added.

Analysts are now predicting that China may remove border controls and reopen the economy sooner than expected next year.

“The risk of an early but controlled exit has increased,” Goldman Sachs’ chief China economist Hui Shan said in a note on Monday, adding that the bank expected such a reopening from April. Other analysts expect a reopening in the second half.

But last week’s ragged loosening has left some in China scared of being caught on the wrong end of rapidly changing rules.

Yin, who lives in a small town near Beijing, said her in-laws had come down with a fever and she had a sore throat, but they did not want to be tested for fear of being quarantined by the government.

“All we want is to recover at home,” he told Reuters, speaking on condition of anonymity.

The yuan jumped to its strongest level against the dollar since mid-September amid a broad market rally as investors expect the removal of pandemic restrictions to improve global growth prospects.

In another hopeful sign, a source at Apple supplier Foxconn (2317.TW) told Reuters the company expected its COVID-hit Zhengzhou plant, the world’s largest iPhone factory, to resume full production this month or early next month.

Economic data underscored the damage caused by the restrictions, as service activity contracted to a six-month low in November.

MESSAGE CHANGE

Along with easing in different cities, Vice Premier Sun Chunlan, who oversees China’s COVID efforts, said last week that the virus’s ability to cause disease was weakening.

That change in messaging aligns with the position held by many health officials around the world for more than a year.

In recent days, major cities in China have continued to ease measures.

Among them, the eastern city of Nanjing eliminated the need for a COVID test to use public transport. So did Beijing, although entry to many offices in the capital still requires negative tests.

“I still can’t feel a very noticeable change,” said Randle Li, 25, a marketing professional in Beijing. Li said his company still required him to take the test every day to go to the office.

Elsewhere, as testing requirements have been relaxed, official figures for new infections have also fallen.

Hu Xijin, a prominent commentator and former editor-in-chief of the state-run tabloid Global Times, said in a blog post that some official counts likely underreported the spread of the virus due to lower testing rates.

While the protests of the past week have subsided, frustration may still boil over, as events in the central city of Wuhan, where the virus first emerged in late 2019, demonstrated this weekend.

On Saturday, people broke down barriers in an apparent attempt to escape a lockdown at a garment industrial park, videos posted on Twitter showed.

Then, on Sunday, dozens of students stood in the rain outside a university in the city demanding more “transparency” in the school’s COVID policies, other videos showed.

Reuters was able to verify that the incidents occurred in Wuhan.

Reporting by Ryan Woo, Bernard Orr and Martin Quin Pollard in Beijing and Julie Zhu and Kevin Huang in Hong Kong; Written by John Geddie; Edited by Clarence Fernandez

Our standards: The Thomson Reuters Trust Principles.

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