The Wall Street Journal reports:

China dropped many of its quarantine and testing requirements and curtailed the power of local officials to shut down entire city blocks, as the government accelerates plans to dismantle zero-Covid controls in the wake of nationwide protests.

The speed of Beijing’s retreat from its pandemic regime suggests the country’s leaders are now more concerned about the damage those controls have caused to China’s economy than the risk of worsening Covid infections that surged to a record high in November. Trade data released before the Covid easing measures were announced on Wednesday showed Chinese exports fell at the steepest pace in more than two years in November, adding to weakening factory activity and a sluggish recovery in the property sector.

Markets seemed to greet China’s policy shift with apprehension. Shares in Hong Kong and mainland China fell Wednesday, suggesting that investors still see a messy path toward reopening, including the potential risks of soaring infections.

Chinese stocks have seesawed as Beijing has sent mixed signals on the pace of opening, and economists have been divided on the impact on spending and other economic activity. [Continue reading…]