For the first time since March 2020, China reopened its border to international visitors on Sunday. Although China no longer requires quarantine, international arrivals have yet to increase due to a surge in COVID-19 infections in the country.
After three years of global isolation, the country dropped all its quarantine and post-arrival testing requirements, with travelers now only needing a negative pre-departure PCR test result to enter.
This year, the Lunar New Year holiday, or "Chunyun" in Chinese, officially begins January 21 and will be the first since 2020 without domestic travel restrictions. The Lunar New Year is celebrated over a period of 40 days, typically with families, across the country. Also known as the Chinese New Year, the holiday is also commemorated by communities in other Asian countries as well.
There were 251,045 inbound passenger trips on Sunday, the official Xinhua News agency reported, citing customs data. That compares with a daily average of about 945,300 arrivals in the first quarter of 2019, according to National Immigration Administration data.
Consumption was a major drag on the economy last year due to Covid outbreaks and lockdowns, which forced shops and restaurants to close on a regular basis and restricted travel. Chinese households have also reduced their spending in order to save more money in the face of rising unemployment and a bleak economic outlook. Now that the country has abruptly abandoned the Covid-Zero strategy and begun reopening its borders, economists anticipate that consumption will rebound strongly later this year after infections peak, aided by a low comparison base but also as pent-up demand is released and economic activity picks up.
Beijing has pledged more fiscal and monetary support this year for an economy emerging from three years of Covid restrictions and a property market crisis. Special bonds are a key source of funding for infrastructure, which economists expect will help fuel economic growth of close to 5% or higher this year.
Stocks in China have made a strong start to 2023 after being caught in a downward spiral for much of last year amid concerns over the economic toll from virus restrictions. Easing regulatory risks and more support measures to revive the troubled property sector have lent an additional boost to the market, helping Asia rally.
The Hang Seng Tech Index jumped 3.2% Monday led by Alibaba Group Holding Ltd. after a top central bank official said the clampdown on the Internet sector was drawing to a close. The broader market also advanced, with a gauge of Chinese equities listed in Hong Kong rising 2%.
As a whole, Chinese equities are benefiting from an improved outlook as policymakers deploy pro-growth policies and the nation’s borders reopen.
Goldman Sachs Group Inc. sees Chinese stocks extending their rally on policy pivots in areas including housing and internet regulation. Meanwhile, tech stocks in Asia are also recovering amid indications that the Federal Reserve will likely slow its pace of interest-rate increases. Goldman expects China’s stocks to gain another 15%, helped by low valuations and policy pivots in areas such as housing.
Oil rallied Monday after Beijing provided refiners and traders with a generous import quota in its second allocation for 2023, as Asia’s biggest economy gears up for growth after dismantling its strict Covid restrictions late last year.
Commodities burst into Monday in an upbeat mood, with crude to copper rising amid growing optimism over Chinese demand. China issued a generous quota for crude imports in a sign that its refiners are set to increase output as the nation moves away from the Covid-Zero policy.
China’s first quarter will be terrible for commodities demand as Covid-19 and the Lunar New Year holidays suppress activity. What happens beyond that is much less certain. Those counting on a second-half recovery got a boost Friday after Bloomberg News reported plans to ease the “three red lines” for property debt that have driven the sector’s prolonged slump. A top central-bank official said the economy will return to “normal” soon.
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