China may signal reversal of Covid policy

China’s top leaders are expected to signal a more pragmatic approach to the COVID-19 restrictions that have sparked protests and emphasize a greater focus on economic growth at a critical meeting. The Communist Party’s top decision-making body, the 24-member Politburo, meets each year in early December to outline the roadmap for the following year’s economic policy. The policy targets, including the growth target, are then published at the annual legislative meeting in March. Economists expect China, which has recently announced easing steps in its zero-COVID policy, to announce more monetary and fiscal stimulus next year to support the recovery. “We expect the policy stance to remain pro-growth in 2023, especially in the first half of the year,” said Carlos Casanova, senior economist at Union Bancaire Privee UBP SA, while Arthur Budaghyan, strategy director at BCA Research Inc., said, “The officials’ statements will indicate that economic growth will be given more priority than in the past few years. Economic conditions are deteriorating and policymakers are approaching a pain point.” A statement to this effect came this morning from the Governor of the People's Bank of China (PBOC), Yi Gang. Yi, who said that the bank's priority is economic growth, predicted that China's inflation outlook will remain in a "moderate area" next year. On the other hand, it was also noteworthy that China's Xinhua news agency published an article yesterday, calling for the lifting of Covid-19 restrictions more rapidly than in the past, in line with the decision to relax quarantine measures taken in November. In November, China also decided to shorten the period in which passengers and contacts arriving in the country must remain in quarantine, and also abandoned its policy of imposing penalties on airlines that detected Covid-19 cases among the passengers they brought to the country. According to Bloomberg's report yesterday, based on sources close to the matter, the Beijing administration is preparing to allow some people who test positive for Covid-19 to isolate themselves at home. Accordingly, low-risk patients will be able to undergo a one-week home quarantine if they prefer. Previously, everyone who tested positive for Covid-19 was sent to state quarantine zones.