China will lift quarantine for all incoming travelers

China is dismantling the remnants of zero tolerance and abolishing quarantine for those entering. Markets still believe that tens of millions of infected people are better than lockdowns

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The National Health Commission of the People's Republic of China announced yesterday that the coronavirus classification was downgraded to a class B infection from class A, and the isolation requirement for those entering China was lifted. From January 8, instead of eight days in quarantine (five days in a designated center or hotel, three days at home), it will be enough to present a fresh (48 hours) negative test for coronavirus. Restrictions on the number of flights to China are also being lifted.

Immediately after that, the number of requests for air tickets to mainland China from Hong Kong increased sixfold , including 10 times to Shanghai. Decreased by about an order of magnitude compared to the last “normal” 2019, passenger traffic, obviously, can only grow. Therefore, the Asian market rally on Tuesday was led by travel agencies and airlines, most associated with China. The CSI 300 rose 1% and the Shanghai Composite rose 0.8%.

At the same time, China's economic indicators leave much to be desired, and it is no longer hard lockdowns that begin to put pressure on them, but the wave of the pandemic. One of the first to feel this was Apple, whose production plans are being disrupted , and Tesla .

Bloomberg experts expect a further drop in industrial profits after it accelerated to 3.6% in January-November due to lockdowns from 3% in January-October. China's GDP growth will drop to 3% this year (the lowest since the 1970s, except for the pandemic dip in 2020), and will recover to only 4.9% in 2023, they predict. The agency, however, acknowledges that the sharp political turn has destroyed most of the expectations of investors and reduced the reliability of economic forecasts.

• The Health Commission claims that more than 90% of cases of the Omicron strain are mild or asymptomatic, however, modeling a new wave gives about 1 million deaths, writes the Financial Times. Official data on the course of the pandemic no longer reflects reality, and there is no new summary statistics after a staggering 250 million infections in 20 days of December. In the eastern provinces, we are talking about millions of new cases per day.
• A large-scale pandemic in a population without natural immunity, in which the smallest proportion of those vaccinated occurs at older ages, is a recipe for new outbreaks outside the (open) borders of China and the emergence of new dangerous strains, epidemiologist Michael Osterholm reminded The Wall Street . Journal “The likelihood of new options is high, and they can seriously affect the rest of the world,” the expert warned.
• The Chinese themselves have different attitudes towards the express abolition of the almost three-year-old strict order. On the one hand, there is a lot of joy on Weibo about future trips abroad, on the other hand, there are enough warnings about the dangers of the coronavirus.

What do I get from this?

now depend to a large extent on the state of the Chinese economy Under the conditions of the European embargo and the price ceiling, both the collapsed demand for Russian oil and the filling of the budget . Which trend will prevail in the coming months - a recovery on the lifting of restrictions or a decrease in production due to illness of the staff - cannot yet be reliably said, but high volatility is almost guaranteed.