China could not make any main adjustments to its Covid coverage any time quickly

A couple pass essentials across a Covid lockdown barrier in Guangzhou city on November 17, 2022.

Future Publishing | Future Publishing | Getty Images

BEIJING — China is unlikely to make any major changes to its Covid policy anytime soon, despite protests this weekend, analysts said.

One of the reasons for the public unrest is the local implementation of the central government’s recent policies, they said.

“Without clear guidance from above, local officials tend to play it safe by sticking to the existing zero-Covid stance,” said Larry Hu, Macquarie’s chief China economist. “It upset a lot of people who were expecting it[ed] further easing after 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 in nearly three years of strict Covid controls. Local infections have increased, leading to more lockdowns over the past week.

Although the protests were infrequent, it was not immediately clear on what scale the demonstrations were taking place.

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

But Hu said it’s unclear whether the purpose of the measures is to drastically reduce new infections – likely requiring a hard lockdown – or slow the pace of the surge with less impact on 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 political clarification and guidance from above,” he said.

In Beijing over the weekend, unconfirmed social media videos showed residents pointing out the 20 measures and convincing their local government that there was no legal basis for locking down their complex.

An implementation gap

On Saturday, a publication overseen by the mouthpiece of the Chinese Communist Party, People’s Daily, said that on the basis of the 20 measures, only district-level authorities or higher could request Covid controls and that school or transport closures should not be arbitrary.

Separately, the People’s Daily ran a front page on Monday about the need to make Covid controls more targeted and effective while removing those that should be removed.

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

Especially before the measures, “it is clear that we have been overly controlling the virus,” Qin said, according to a Mandarin translation of CNBC. “Because it is excessive, it has brought many problems.”

He noted that it is no longer sustainable for China’s economy and society to accept continued Covid controls.

Read more about China from CNBC Pro

China’s GDP barely grew in the second quarter, dragged down by a strict lockdown in Shanghai. As of the third quarter, annual growth is just 3%, well below the official target of around 5.5% announced in March.

“In the short term, Covid policy is just being refined without moving the needle,” said Bruce Pang, JLL’s chief economist and research director for Greater China. “The focus of the narratives is expected to shift back and forth between eliminating cases and establishing more precise actions.”

“The authorities are sending signals of a more pragmatic stance on the economic roadmap, COVID policies and geopolitical relations, all of which will help enable China’s gradual economic recovery,” he said.

Mostly asymptomatic cases

China’s rapid lockdown in 2020 helped control Covid domestically, preventing many deaths and allowing businesses to resume work within a quarter. Authorities have also worried about the public health system’s ability to handle a spate of infections.

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

Mainland China reported more than 40,000 local Covid infections across the country for Sunday and no new deaths. Most infections were asymptomatic. As of Wednesday, the national total – but not the number of symptomatic cases – has risen well above the cases reported during the height of the lockdown in Shanghai.