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Earlier this week, China presented the updated version of its COVID-19 guidelines. The aim is to significantly relax China’s strict COVID-19 control policy, which has been heavily criticized in recent months.
The new guidelines, which will enter into force on January 8, downgrade the management of COVID-19 to Category B from Category A. This means that country will no longer require quarantine measures for COVID cases and will stop tracing their close contacts.
Moreover, China will also stop its frequent-testing campaign and centralized quarantine for inbound travelers.
The chief China economist at Morgan Stanley, said the new guidelines represent the “last hurdle to full reopening.”
“This means China’s reopening will be broadly complete by early January – a pace in line with the bull-case expectations (on COVID) from our year-ahead outlook. We continue to expect China to attain above-consensus growth of 5.4% in 2023,” he said in a note.
His counterpart at Goldman Sachs sees the updated guidelines as “another significant step towards full reopening.”
“This adds conviction to our below-consensus forecast for Q4 GDP growth (+1.7% yoy) and above-consensus 2023 GDP forecast (+5.2% yoy),” the Goldman economist said in a note.
He also believes the China reopening is bullish for CNY.
