China defuses anti-COVID measures

The Chinese authorities have announced the most significant easing of lockdown measures since the beginning of the pandemic, introduced as part of a “zero-Covid” policy. The main principle for their introduction will now be the minimization of “high risk” areas, which are subject to the quarantine regime when coronavirus cases are detected: its extension to include entire districts and cities will now be considered redundant.

The new rules stipulate that “high-risk” areas must be limited to individual apartment floors and buildings, as well as households, rather than “entire districts and neighbourhoods.” Local authorities must also raise a quarantine if no new cases are reported within five days.

The rolling back of sanitary measures was preceded by protests against anti-COVID-19 restrictions, as well as a slowdown in the rates of economic growth in China, which also affected the country’s foreign trade: China’s exports in November fell by 8.7% YoY, imports - by 10.6%.

Despite the economic losses, the complete abolition of lockdown measures will drag on for a long time, as Capital Economics’ experts expect. The process will be impeded by low vaccination rates among the elderly, as well as the need to reduce pressure on the health system in cases of “secondary” growth in the incidence of a coronavirus disease.

As a result of the easing of lockdown measures, imports to China may grow due to a partial recovery in consumer demand, while exports will depend primarily on the global situation: with weak demand due to a slowdown in economic growth in other countries, the growth of cross border sales may remain negative in subsequent periods.