China reduced quarantine times for inbound travelers by half, the biggest shift yet in a COVID-19 policy that has left the world’s second-largest economy isolated as it continues to try and eliminate the virus.
Travelers will now only need to spend seven days in a quarantine facility, and then monitor their health at home for a further three days, according to a revised government protocol released Tuesday by China’s National Health Commission. That’s down from 14 days hotel quarantine in many parts of China currently, and as many as 21 days of isolation in the past.
The change, which still leaves China an outlier in a world that has mostly adjusted to living with the virus, comes after Beijing and Shanghai said they had no new locally-transmitted COVID infections on Monday, for the first time since February, following months of bruising curbs.
Nationwide, China reported just 22 cases on Monday, a stark contrast to other parts of the world that are seeing thousands of new infections a day. There were another 78 infections detected among incoming travelers.
Investors used to hearing about tighter internal restrictions the world’s No. 2 economy were buoyed by the news, with travel-related stocks leading an afternoon rally. But Chinese officials said the decision was not a sign of reopening, and based solely on the shorter incubation period of the omicron variant.
The new rules are designed to optimize the country’s prevention and control work, and don’t signal a change in course, said Lei Zhenglong, an NHC official.
“It’s absolutely not loosening up, but a more scientific and targeted approach,” Lei said at an afternoon briefing.
Nevertheless, it’s President Xi Jinping’s biggest concession yet to investors and businesses anxious over the country’s growing isolation. China’s leaders are also permitting the travel easing from a position of strength, after declaring victory over the spring outbreak and pronouncing the brutal measures used to quash it as “completely correct.”
COVID restrictions have crushed economic activity, with economists expecting second-quarter gross domestic product growth to weaken to just 1.5% from a year ago. The slow recovery and threat of repeat disruptions from lockdowns and other restrictions have pushed the government growth target of about 5.5% for 2022 further out of reach. Economists surveyed by Bloomberg predict GDP growth of 4.2% this year, well below the target.
The timing of the quarantine reduction coincides with reports that the People’s Bank of China is pledging to keep monetary policy supportive, said Jane Foley, a London-based strategist at Rabobank.
“Together this suggests a potentially more optimistic outlook for the Chinese economy,” she said.
Investors agreed: Air China Ltd.’s Hong Kong-traded shares were top performers, rising 10%. China Southern Airlines Co. and China Eastern Airlines Corp. both gained more than 5.3%. Cathay Pacific Airways Ltd. rose 6.4%.
More broadly, the CSI 300 Index extended gains to close 1% up in Shanghai. Futures contracts on the S&P 500 also built on their advance after the announcement, while the yuan erased losses to rise both offshore and onshore.
Testing requirements during the mandatory quarantine period were also changed in the protocol. Travelers are now required only to give throat swabs, rather than nasal ones. The new guidelines, updated for the first time since May 2021, make no mention of any vaccination requirements for travelers.
Many countries made entry easier for inoculated travelers when they first started to open up post-COVID.
Three factors drove the change, said the NHC’s Lei. China’s COVID outbreak is coming under control, the circulating omicron variant has a shorter incubation period, and previous trial runs showed a shorter quarantine period could be successful.
“China’s virus situation has gradually stabilized in the past month, despite earlier outbreaks that hit the eastern coastal region, providing a window to optimize and adjust the COVID protocol,” he said.
The change to 7 days of centralized quarantine brings China in line with Hong Kong, which has been thronged by mainland residents trying to find an easier way back home. But getting into China will remain complex and challenging, with limited flights and onerous requirements especially for those who have recovered from infection.
International flights to the mainland remain at near rock-bottom levels, according to aviation data provider VariFlight, and seats are costly. In August, a one-way ticket in business class on China Eastern Airlines Corp. non-stop from New York to Shanghai cost $13,200. A premium economy seat on a United Airlines Holdings Inc. flight in October is going for $9,700.
The quarantine reduction “potentially makes it easier for Chinese companies and their executives to visit the U.S.,” Sean Stein, chairman of the American Chamber of Commerce in Shanghai. “For this measure to be truly effective, however, we need more international flights and greater capacity on those flights, which are currently forced to limit the number of passengers on each plane arriving in Shanghai.”
“We also need local governments to implement the decision with alacrity,” he said, referring to the web of differing rules in different provinces that poses another hurdle to travel.
Meanwhile, China’s 1.4 billion people remain vulnerable to sudden lockdowns, constant testing, mandatory quarantine camps and limits on domestic movement. The country’s spring outbreak has made local governments react even more quickly to flareups, imposing broad lockdowns over a handful of cases.
In the capital of Beijing, residents are required to show a green code on a mobile app that tracks their health status, and take a COVID test every three days to enter any public venue, including restaurants, shops, and mass transportation. Even kids over age three must be tested to play in the park.
At least five key cities and provinces have said virus control measures will continue as their party chiefs — many of whom are Xi’s close allies — addressed local party congresses in recent days.
With the country still adhering to COVID zero, balancing the need for life to return to normal and controlling the spread of the virus is going to be a challenge, said Jin Dong-yan, a virologist at the University of Hong Kong.
“This conflict is going to test China,” he said.
