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COVID situation
Chinese authorities have reassured the public that the COVID-19 outbreak is under control and that measures to prevent its spread will be gradually lifted. As of December 29, 2022, Hong Kong has removed most remaining COVID-19 restrictions, including testing requirements for inbound travelers and social distancing, although mask use both indoors and outdoors remains mandatory. Inbound travelers will be required to self-test for the virus for five days and present a negative quick antigen test result before boarding their flights. The Chinese Ministry of Transport has also released a plan for the “gradual and orderly resumption” of international passenger transport and is working to restore international passenger routes before comprehensively reopening borders.
The Chinese General Administration of Customs has announced that as of January 8, 2023, anti-COVID-19 measures, including nucleic acid testing, will be removed at ports of entry for all imported cold-chain foods and non-cold-chain items. COVID-19 will also be downgraded from a Class A infection to a Class B infection as of January 8, with a shift in focus from infection prevention to medical treatment. In addition, China will resume accepting foreign visa applications and other immigration procedures, including the implementation of the 24/72/144-hour visa-free transit policy and the issuance of temporary entry permits.
China threatened to take countermeasures
China has threatened to take countermeasures against countries that have introduced testing requirements for passengers from China amid concerns over a lack of data on infections and fears of new coronavirus variants emerging. Australia and Canada are the latest countries to have implemented such measures, requiring travellers from China to take a Covid-19 test before boarding their flight. China’s foreign ministry spokesperson, Mao Ning, has said: “We are firmly opposed to attempts to manipulate the Covid measures for political purposes and will take countermeasures based on the principle of reciprocity.” The US and France are among the countries to have defended their testing requirements. The World Health Organisation (WHO) has invited Chinese scientists to present detailed data on viral sequencing and to share data on hospitalisations, deaths and vaccinations. New Zealand is the only country not to have introduced such measures.
Steady recovery in 2023
According to experts, China’s economy is expected to see a steady recovery in 2023 due to stronger policy support and domestic demand. Despite the potential for short-term economic disruption due to the country’s optimized epidemic response, this is expected to bolster growth for the year as a whole. Han Wenxiu, executive deputy director of the office of the Central Committee for Financial and Economic Affairs, believes that the recovery will pick up pace in the first half of the year, particularly in the second quarter when more factories increase production and businesses reopen. Analysts expect China to renew its policy support for growth, which will work in conjunction with existing policy measures to drive a steady economic rebound. This is expected to include strengthening policy coordination, increasing the effectiveness of fiscal policy, and making targeted and effective use of monetary policy.
Domestic demand is also expected to play a larger role in driving economic growth as China shifts from an investment-led growth model to one that combines both investment and consumption. Economists are particularly hopeful about the revival of consumption in 2023 as the economy strengthens. Wen Bin, chief economist with China Minsheng Bank, predicts that consumption in China will increase by 9% year on year in 2023, due to income increases, pro-consumption policies, and a low base last year. The Chasing International Economic Institute expects per capita consumption expenditure in China to grow by 8-12% from the previous year in 2023, while total retail sales of consumer goods are expected to expand by 7-11% year on year. To increase domestic demand, China will need to focus on increasing incomes, particularly for those impacted by the epidemic, relaxing restrictions on house purchases and mortgage loans, and reviving service consumption.