- Shanghai, Hangzhou scrap range of testing requirements
- New daily infections nationwide fall to lowest in two weeks
China seems to be engineering a gradual shift away from Covid Zero as it changed testing policy over the weekend. China's financial capital, Shanghai, scrapped testing requirements to enter restaurants, bars, and nursing homes. Hangzhou, Shenzhen, and Dalian, other major tech cities, followed suit as Chinese govt officials iterated that the country's management of the pandemic has “hit a new phase” as Covid numbers countrywide have fallen. China's recent equities rally was largely driven by reopening bets on airlines, casinos, and restaurants with some investors shifting towards long term reopening bets on travel, healthcare, and consumer equities.
However, cities battling outbreaks, like Beijing and Chongqing are largely locked down. The government is expected to make 10 additional Covid measures on Wednesday. As research shows that the easing of Covid measures leads to a spike in cases, Goldman Sachs' base case scenario for China sees a continuation of Covid Zero until April.
I think scenarios like the above just fuel the fire for not investing in China, despite what BB banks and hedge funds see. But at the same time, is there any way to reap the benefits of high growth associated with emerging markets without taking on such risk? Any specific countries? Or is taking on such risks just part of the process?
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