J.P.Morgan: Too Early To Think About COVID Policy Change, Still Eye Spring Reopening

J.P.Morgan note that “Omicron uncertainty remains the biggest drag on economic recovery. The Politburo Standing Committee held a meeting regarding how to improve the implementation of zero-COVID policy (ZCP). The meeting emphasized sticking to ZCP, and highlighted the importance of implementing ZCP on a scientific and accurate basis.”

• “Importantly, the meeting called for correction of excessive restrictions, taking action at early stages and maintaining a normal work and living environment.”
• “The announcements show the intension to balance the implementation of ZCP against the increasing economic cost, fiscal burden and social fatigue associated with COVID restrictions. Still, it might still be too early to think about reopening or significant change in ZCP in the near term, especially as COVID risk tends to be higher during the winter season.”
• “We maintain our baseline assumption that reopening (significant relaxation of COVID policy) will happen next spring, and in the coming months the adjustment will mainly focus on fine-tuning and correction of excessive measures (i.e. back to official guidelines issued by the National Health Commission and State Council).”