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China may not make major changes to its Covid policy anytime soon

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A couple pass necessities over a Covid lockdown barrier in the city of Guangzhou on November 17, 2022.

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BEIJING — China is unlikely to make major changes to its Covid policy in the near future despite protests over the weekend, analysts said.

One of the reasons for the public unrest was the local implementation of recent central government policy, they said.

“Without clear guidance from the top, local officials are inclined to play it safe by sticking to the current zero Covid stance,” said Larry Hu, chief China economist at Macquarie. “It upset a lot of people, who expect[ed] more easing following the “20 measures” announced earlier this month.

Groups of people in China took to the streets over the weekend to vent their frustration, built up over nearly three years of strict Covid controls. Local infections have increased, causing more lockdowns in the past week.

Although protests were rare, it was not immediately clear on what scale the demonstrations had taken place.

Earlier this month, the central government signaled a step towards reopening by announcing “20 measures” to reduce quarantine times and generally make Covid checks more targeted.

However, Hu said it was unclear whether the aim of the measures was to drastically reduce new infections – likely requiring a strict lockdown – or to slow the rate of increase, with less disruption to the economy and hospitals.

“The coming week could be crucial, as news of social unrest over the weekend has heightened the sense of urgency for more policy clarification and advice from the summit,” he said.

In Beijing over the weekend, unverified videos on social media showed residents pointing to the 20 measures and convincing their community leadership that there was no legal basis to lock down their resort. apartments.

An implementation gap

On Saturday, a publication overseen by the People’s Daily, mouthpiece of the Chinese Communist Party, said that based on the 20 measures, only authorities at county level or above could call for Covid checks, and that the closures schools or traffic should not occur arbitrarily.

Separately, the People’s Daily published a front-page op-ed on Monday on the need to make Covid controls more targeted and effective, while scrapping those that should be scrapped.

It will likely take a month for the 20 measures to be fully implemented, after which policymakers can make further changes, said Qin Gang, executive director of the Beijing-based research institute ICR.

Especially before the measurements, “it’s clear that we have excessively controlled the virus,” Qin said in Mandarin, according to a CNBC translation. “Because it’s excessive, it’s caused a lot of problems.”

He noted that it was no longer sustainable for the Chinese economy and society to accept continued Covid controls.

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China’s GDP barely grew in the second quarter, dragged down by a strict lockdown in Shanghai. In the third quarter, growth for the year is only 3% so far, well below the official target of around 5.5% announced in March.

“In the short term, Covid policy will only be fine-tuned without moving the needle,” said Bruce Pang, chief economist and head of research for Greater China at JLL. “The focus of the stories is expected to swing between eliminating cases and taking more specific action.”

“The authorities are sending signals of a more pragmatic attitude towards the economic roadmap, COVID policy and geopolitical relations, all of which will help ensure a gradual economic recovery for China,” he said.

Mostly asymptomatic cases

China’s rapid lockdown in 2020 helped control Covid nationwide, prevent many deaths and get businesses back to work within a quarter. Authorities have also expressed concern about the ability of the public health system to handle a surge of infections.

However, the rise of more contagious variants and stricter virus testing requirements, among other restrictions, have weighed on business and consumer sentiment.

Mainland China on Sunday reported more than 40,000 local Covid infections spread across the country, and no new deaths. Most infections were asymptomatic. Since Wednesday, the national total – but not the number of cases with symptoms – has climbed well above that reported at the height of Shanghai’s lockdown.

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