(Bloomberg) -- China moved definitively away from its long-held Covid Zero approach Wednesday, easing a range of restrictions that it has persisted with way after the rest of the world moved on to living with the virus.
By jettisoning key tenets of the virus elimination strategy, including forcing infected people into centralized quarantine camps, China is suddenly shifting gear faster than expected. The accelerated pace reflects pressure on President Xi Jinping to chart a path out of the crisis and quell public discontent.
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Less than a month after starting the reopening process by issuing 20 guidelines to local officials to minimize disruption from looser rules, the National Health Commission set out 10 new measures to assist the move away from Covid Zero. Markets appeared to be taken aback by how far-reaching the steps were, despite a buildup in expectations in recent weeks. An initial rally fizzled as some investors worried about a spike in infections and chaos that might ensue.
Top health officials sought to project confidence at a briefing in Beijing after the announcement, insisting that China’s Covid Zero adherence had limited loss of life, and that conditions were now appropriate to move on.
Liang Wannian, an epidemiologist turned health official who led China’s initial pandemic response, said the adjustment was “proactive, rather than reactive” and that it would “ensure resources are utilized more efficiently and better coordinate outbreak control and economic development.”
The latest steps include accelerating vaccination among the elderly and stopping local officials from designating large areas as high risk, which had led to lockdown-like curbs in entire housing compounds and other places. A green health code on contact-tracing smartphone apps is no longer needed for domestic travel or to enter most venues. Bloomberg News reported earlier that changes were imminent.
A nationwide expansion of the home isolation rule, already allowed in Beijing after quarantine facilities ran out of space, could shift public perception of the virus from a serious health threat to a more commonplace illness. The government championed its Covid Zero approach throughout the pandemic, involving widespread testing and lockdowns to wipe out infections. But it left China isolated and caused misery and economic hardship.
The three-year adherence to Covid Zero has hit economic activity, pushing down consumer and business confidence and leaving people stuck in a cycle of outbreaks and lockdowns. Tragic incidents blamed on Covid controls, including a deadly fire in Xinjiang, intensified public anger.
With an eye on recovery, senior officials are debating an economic growth target of around 5% in 2023.
The Politburo said it will use “targeted and forceful” monetary policy as it aims for “overall improvement” in the economy next year, according to a Wednesday readout of its most recent meeting. The phrase “Dynamic Zero Covid,” which it has used previously, didn’t appear.
Asymptomatic and mild cases will now be able to isolate at home, provided their residences meet certain conditions, which authorities didn’t specify. People can still go to centralized quarantine facilities if they prefer. Close contacts can either isolate at home or at government facilities, and they can finish quarantine five days after a negative PCR test.
There was also a pledge to bolster vaccination rates among the elderly. Fewer than 50% of people aged 80 or above have received boosters and only about 60% have had full doses, raising concern that fatalities could surge and health-care services come under even greater pressure as the virus inevitably spreads.
Health officials shortened the list of medical exemptions for vaccinations to increase the take up. They also said Chinese vaccines have been widely used globally and at home, with over 1 billion doses administered, including to senior Communist Party officials.
Yet China, where Covid-19 emerged about three years ago, is still is far behind the rest of the world in reopening. For example, anyone flying in from overseas must quarantine for five days in a hotel followed by three days at home, while mask-wearing is mandatory in most places.
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Stocks initially reacted positively to the news Wednesday, including the country’s three main airlines, Air China Ltd., China Eastern Airlines Corp. and China Southern Airlines Co., which for a time all surged more than 10% in Hong Kong. The CSI 300 Index later erased its gains and a key gauge of Hong Kong-listed Chinese stocks also reversed course to slide 1.6%.
Expectations that China would loosen its Covid regime spurred the strongest monthly rally in Hong Kong-listed Chinese stocks in nearly two decades in November.
State media had painted Covid as fearsome and Western countries’ acceptance of it as a moral failing. But as other places moved past the pandemic, a growing number of people started questioning why they were stuck with China’s approach, raising pressure on the authorities. Protests eventually spilled into streets in cities around the country, with some demonstrators calling for Xi to step down — incredibly rare scenes of public unrest in the world’s most populous nation.
Covid cases nationwide surged to highs of nearly 40,000 a day at the end of November before declining — more as a result of dialed-back testing. While loosened rules will drive the numbers higher again, especially as cold weather intensifies, the government appears to consider the trade-off a necessary one. It remains to be seen how evenly the changes will be applied nationwide.
Authorities have urged grassroots medical institutions to help meet health-care demands so hospitals aren’t overwhelmed. Large hospitals have been asked to set aside special wards to treat vulnerable Covid patients, while the number of so-called fever clinics will be increased to identify cases.
The 20 measures issued last month, including cutting quarantine times and discouraging arbitrary mass testing, were met with a muddled and chaotic rollout. A reversion to strict curbs in some cities fueled public discontent, with residents brandishing the new guidelines to stop neighborhood authorities from imposing lockdowns again.
--With assistance from Lianting Tu, Fran Wang and Yujing Liu.
(Updates with more detail and comments from government briefing in Beijing.)
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