Passengers wait to board a train at Hongqiao Railway Station in Shanghai on December 6, 2022.
Hector Retamal | Afp | Getty Images
BEIJING — As mainland China eases many of its strict Covid controls, analysts say the country is far from a quick return to pre-pandemic conditions.
National authorities announced sweeping changes on Wednesday to make it easier to travel within the country, keep businesses open and allow Covid patients to remain in home quarantine.
“These measures are very welcome for an economy that has been severely damaged this year,” Ting Lu, chief China economist at Nomura and a group, said in a report.
“However, we caution that the road to full reopening may still be gradual, painful and bumpy,” they said. According to the report, the country is not well prepared for a wave of mass infections, and the infection rate of 0.13% leaves the country well below what is needed for herd immunity.
In mainland China, daily Covid infections, which are mostly asymptomatic, reached a record high of over 40,000 in late November. The number has dropped as cities have eased their virus testing requirements.
According to a December 4 report from Goldman Sachs, China’s progress on reopening could take several months, with infections likely to increase.
“With the majority of the population uninfected prior to reopening, lower elderly vaccination rates than many other economies, and cultural similarities, we believe Hong Kong and Taiwan’s reopening is most appropriate for the People’s Republic of China,” said Hui Shan, China’s chief economist, and a group.
“Their experience suggests that cases will increase rapidly and last for some time after reopening, with high senior vaccination rates key to a safe reopening and mobility declining dramatically as cases increase,” Goldman said in the report.
In the past two months, Taiwan no longer requires international travelers to quarantine upon arrival and said people do not have to wear masks outdoors.
60% of people can get Covid
Last week, mainland Chinese authorities announced another push to vaccinate the country’s elderly.
Feng Zijian, former deputy director of China’s Centers for Disease Control and Prevention, said during a speech at Tsinghua University on Tuesday that about 60% of people could become infected in the near term regardless of how policies are adjusted. He said that number could eventually rise to 80% or 90%.
The new measures, released by the health commission on Thursday, focused on how to treat Covid patients at home and included a list of medicines.
Whether out of necessity or precaution, there was a growing local demand for the appropriate drugs.
JD Health said online sales of cold medicines, antipyretics and related products are increasing. The company said its latest data showed transaction volume for the week ending Monday was up 18 times from October.
Bruce Pang, chief economist and head of research for Greater China at JLL, said looking ahead, it is quite clear that China is about to pass a turning point in its Covid policy.
As of Wednesday, negative virus tests are no longer required to travel within China, with large numbers of people usually traveling around the upcoming Lunar New Year holiday. This means there could be an increase in Covid infections and China’s policy will never be reversed, Pang said.
Chinese travel booking site Trip.com said air ticket searches for the Lunar New Year, which falls in late January 2023, rose to the highest level in three years following the relaxation of domestic travel policies.
It’s not a full launch yet
Health authorities stressed on Wednesday that the latest changes do not mean a full reopening. There was no reduction in the quarantine period for international travelers and the measures include cases where a negative virus test is still required.
At the local level, the city of Beijing said on Wednesday evening that people who want to dine in restaurants must still show a negative virus test within the past two days.
But because of the increase in positive cases, virus test results are taking longer to process, local Beijing media reported Wednesday, citing an employee of a virus testing firm. The report said that since the virus tests are done in sets of 10, if one person tests positive, the machine must run additional tests.
Goldman Sachs analysts expect China’s reopening — defined as a move away from lockdowns — to come in the second quarter of 2023, according to a separate report on Wednesday.
“An earlier-than-expected opening will add more downward pressure on near-term growth, but add moderate upside risk to our GDP growth forecast for 2023,” the analysts said.
They expect any initial reopening to impact the economy “due to increased infections, temporary labor shortages and supply chain disruptions.”
Goldman predicts 3% growth for the Chinese economy this year and 4.5% in 2023.
