Goldman Sachs warned that China is “months away from the real reopening” of the COVID zero policy

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Analysts said they do not expect significant easing until after the Xi Jinping regime's annual parliamentary session in March

Goldman Sachs warned that China is

Officials with protective equipment in a confined residential area in Beijing (Reuters)

The Chinese regime's “zero COVID” policy could last for several more months, according to analysts at the firm Goldman Sachs, in a scenario which would heighten fears of a global recession.

The latest trading on the Hong Kong and Shanghai stock exchanges was higher after volatile days, fueled by speculation that Beijing could soon ease its policy against the pandemic. However, economists at Goldman Sachs put a cold shoulder on the rumours.

“There are still months to go for the real reopening, as vaccination rates for the elderly remain low and case-fatality rates appear high among the unvaccinated according to official data from Hong Kong,” Goldman Sachs economists led by Hui Shan said in a CNBC note on Monday. Sunday.

Analysis suggests they don't expect significant easing to start until after China's annual parliamentary session in March.

The Chinese regime is likely to stick to its zero COVID policy “until all necessary medical preparations have been made,” analysts at the firm explained. Thus, the consultancy maintains its opinion that China could reopen in the second quarter of 2023, and the “reference” expectation was a reopening in the April-June quarter.

Goldman Sachs warned that China is

Review of citizens in Beijing (Reuters)

That decision is expected because of the effects it would have on stocks. “Equity markets typically react more positively to domestic policy easing than to international reopening, with consumer and domestic cyclical sectors outperforming,” the CNBC note said. “We estimate that a full reopening could drive 20% upside for Chinese equities based on empirical, top-down and historical sensitivity analyses,” the separate note from economists including Kinger Lau commented.

COVID ON THE RISE

China recorded its highest number of infections on Monday despite lockdowns that have affected manufacturing, education and daily life in the country.

The country reported more than 5,600 new casesthis day, almost half of them in the province of Guangzhou, a manufacturing center in the south with important commercial ports.

Beijing ended this weekend the hope of a possible relaxation of its strict zero COVID policy, which includes lockdowns, quarantines and mass testing to contain even the smallest outbreak of contagion.

A wave of scandals linked to the lockdowns, with villagers complaining of inadequate conditions, lack of food and delays in medical care, undermined public confidence in the measures.

A lockdown in The world's largest iPhone factory in Zhengzhou prompted Apple to warn Sunday that production was “temporarily impacted” and customers will face delays in receiving their orders.

“The (Zhengzhou) plant is currently operating at a significantly reduced capacity,” Apple said in a statement late Sunday.

Taiwanese tech giant Foxconn, which runs the plant, revised down its quarterly income due to the confinement.

China's National Health Commission assured on Saturday that it will maintain the zero covid policy, burying rumors that Beijing would ease its strict san itaria.

(with information from Reuters and AFP)

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