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Tag Archives: curbs
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EU plans to relax curbs on tax credits in response to ‘toxic’ US subsidies
The EU is planning to hit back at the US’s $369bn Inflation Reduction Act by easing restrictions to allow a wave of tax credits for green investment.
Under a draft plan seen by the Financial Times, the European Commission will relax state-aid rules to support investment in green sectors, including via the creation of tax benefits. Some of the €800bn in its NextGenerationEU Covid-19 recovery fund could also be redirected towards tax credits, according to the draft.
The proposed measures, which have yet to be finalised and could change by Wednesday, are part of a comprehensive Brussels plan to respond to the US legislation, which has provoked a flood of warnings that companies will decamp from the EU to the US to take advantage of the subsidies.
“What we are saying here is that if you want to give investment aid you can give that in the form of a tax credit if that’s more accommodating for the business,” commission vice-president Margrethe Vestager told the FT.
She described the IRA as having a “toxic” effects on some European industries and insisted that a further relaxation of state-aid rules should be targeted and temporary.
By further relaxing the EU’s state-aid rulebook, which aims to avoid a subsidy race between member states, Brussels is attempting to emulate one of the most-vaunted benefits of the IRA, namely the simplicity of companies accessing federal tax credits.
But the move strays into controversial territory within the EU, as it will be far easier for deep-pocketed countries such as Germany to dole out fiscal incentives than their fiscally stretched counterparts in the south.
Member states are divided over whether and for how long to allow big exemptions from rules to police state aid. Some countries in the south warn that it risks tilting the level playing field by disproportionately aiding rich countries to pour money into their companies.
Christian Lindner, Germany’s finance minister, on Monday said Europe did not need an “excessive” overhaul of the rules but backed measures to streamline decision-making. “State aid must become more agile, we have to make decisions more quickly. But we don’t need any excessive extension of subsidies in the EU,” he said.
A temporary crisis and transition framework would allow greater aid for more mature technologies and renewable energies, going beyond those already defined by the EU’s current renewable energy laws to include green hydrogen and biofuels, the draft proposal said.
“The provisions on tax benefits would enable member states to align their national fiscal incentives on a common scheme, and thereby offer greater transparency and predictability to businesses across the EU,” it added.
Brussels also intends to simplify and accelerate approvals for projects of common European interest involving several countries and will set overall targets for green industrial capacity by 2030.
The reforms aim to expand the so-called “block exemption” regime, allowing more state support to be granted without explicit commission approval. That would make it easier for governments to subsidise hydrogen, carbon capture, zero-emission vehicles and energy efficiency measures.
Brussels estimates that industry needs to invest €170bn by 2030 in manufacturing plants for solar, wind, battery, heat pump and green hydrogen production.
Clean technology industries have criticised the funding regime in the EU for being too complicated to access the financing needed to scale up their businesses, saying the tax credits in the US were a simpler and more attractive system.
The document binds together several major legislative reforms that were already planned, such as an overhaul of the EU’s electricity market and an act to boost domestic production of raw materials such as cobalt and lithium that are crucial elements for clean energy technologies.
The draft followed a letter from Vestager in which she acknowledged that not all countries have the same capacity to hand out state aid. Germany and France accounted for 77 per cent of aid given under looser competition rules introduced during the pandemic, she wrote.
The draft proposal stated Brussels would aim to set up a European sovereignty fund by the middle of this year to allow all 27 governments to fund state aid.
“To avoid fragmenting the single market due to varying levels of national support — and varying capacities to grant such support — there also needs to be adequate EU-level funding to facilitate the green transition across the union as a whole,” it said.
Additional reporting by Guy Chazan in Berlin
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China imposes transit curbs for S.Korea, Japan in growing COVID spat
BEIJING, Jan 11 (Reuters) – China introduced transit curbs for South Korean and Japanese nationals on Wednesday, in an escalating diplomatic spat over COVID-19 curbs that is marring the grand re-opening of the world’s second-largest economy after three years of isolation.
China removed quarantine mandates for inbound travellers on Sunday, one of the last vestiges of the world’s strictest regime of COVID restrictions, which Beijing abruptly began dismantling in early December after historic protests.
But worries over the scale and impact of the outbreak in China, where the virus is spreading unchecked, have prompted more than a dozen countries to demand negative COVID test results from people arriving from China.
Among them, South Korea and Japan have also limited flights and require tests on arrival, with passengers showing up as positive being sent to quarantine. In South Korea, quarantine is at the traveller’s own cost.
In response, the Chinese embassies in Seoul and Tokyo said on Tuesday they had suspended issuing short-term visas for travellers to China, with the foreign ministry slamming the testing requirements as “discriminatory.”
That prompted an official protest from Japan to China, while South Korean foreign minister Park Jin said that Seoul’s decision was based on scientific evidence, not discriminatory and that China’s countermeasures were “deeply regrettable.”
In a sign of escalating tensions on Wednesday, China’s immigration authority suspended its transit visa exemptions for South Koreans and Japanese.
The spat may affect economic relations between the three neighbours as well.
Japanese department store operator Isetan Mitsukoshi Holdings Ltd (3099.T) and supermarket operator Aeon Co (8267.T) said they may have to rethink personnel transfers to China depending on how long the suspension lasts.
“We won’t be able to make short-term business trips, but such trips had dwindled during COVID anyway, so we don’t expect an immediate impact. But if the situation lasts long, there will be an effect,” said a South Korean chip industry source who declined to be identified, as the person was not authorised to speak to media.
China requires negative test results from visitors from all countries.
COUNTING DEATHS
Some of the governments that announced curbs on travellers from China cited concerns over Beijing’s data transparency.
The World Health Organization has said China was underreporting deaths.
China’s health authorities have been reporting five or fewer deaths a day over the past month, numbers that are inconsistent with the long queues seen at funeral homes. In a first, they did not report COVID fatalities data on Tuesday.
China’s Center for Disease Control and Prevention and the National Health Commission did not immediately respond to requests for comment.
Without mentioning whether daily reporting had been discontinued, Liang Wannian, head of a COVID expert panel under the national health authority, told reporters deaths can only be accurately counted after the pandemic is over.
China should ultimately determine death figures by looking at excess mortality, Wang Guiqiang, the head of the infectious diseases department at Peking University First Hospital said at the same news conference.
Although international health experts have predicted at least one million COVID-related deaths this year, China has reported just over 5,000 since the pandemic began, a fraction of what other countries have reported as they reopened.
China says it has been transparent with its data.
State media said the COVID wave was already past its peak in the provinces of Henan, Jiangsu, Zhejiang, Guangdong, Sichuan and Hainan, as well as in the large cities of Beijing and Chongqing – home to more than 500 million people combined.
‘INSULTING’
On Wednesday, Chinese state media devoted extensive coverage of what they called as “discriminatory” border rules in South Korea and Japan.
Nationalist tabloid Global Times defended Beijing’s retaliation as a “direct and reasonable response to protect its own legitimate interests, particularly after some countries are continuing hyping up China’s epidemic situation by putting travel restrictions for political manipulation.”
Chinese social media anger mainly targeted South Korea, whose border measures are the strictest among the countries that announced new rules.
Videos circulating online showed special lanes coordinated by soldiers in uniform for arrivals from China at the airport, with travellers given yellow lanyards with QR codes for processing test results.
One user of China’s Twitter-like Weibo said singling out Chinese travellers was “insulting” and akin to “people treated as criminals and paraded on the streets.”
Annual spending by Chinese tourists abroad reached $250 billion before the pandemic, with South Korea and Japan among the top shopping destinations.
Repeated lockdowns have hammered China’s $17 trillion economy. The World Bank estimated its 2022 growth slumped to 2.7%, its second-slowest pace since the mid-1970s after 2020.
It predicted a rebound to 4.3% for 2023, but that is 0.9 percentage points below its June forecast because of the severity of COVID disruptions and weakening external demand.
($1 = 6.7666 Chinese yuan renminbi)
Additional reporting by Beijing Newsroom; Kaori Kaneko, Mari Shiraki and Elaine Lies in Tokyo; Joyce Lee, Hyunsu Yim and Heekyong Yang in Seoul
Writing by Marius Zaharia; Editing by Gerry Doyle and Kim Coghill
Our Standards: The Thomson Reuters Trust Principles.
China retaliates against South Korea’s COVID curbs, says outbreaks past peaks
BEIJING, Jan 10 (Reuters) – Beijing retaliated on Tuesday against South Korea’s COVID-19 curbs on travellers from China, while state media further downplayed the severity of the outbreak in the last major economy to reopen its borders after three years of isolation.
China ditched mandatory quarantines for arrivals and allowed travel to resume across its border with Hong Kong on Sunday, removing the last major restrictions under the “zero-COVID” regime which it abruptly began dismantling in early December after historic protests against the curbs.
But the virus is spreading unchecked among its 1.4 billion people and worries over the scale and impact of its outbreak have prompted South Korea, the United States and other countries to require negative COVID tests from travellers from China.
Although China imposes similar testing requirements for all arrivals, foreign ministry spokesperson Wang Wenbin told reporters on Tuesday the entry curbs for Chinese travellers were “discriminatory.”
“We will take reciprocal measures,” Wang said, without elaborating.
The Chinese embassy in South Korea has suspended issuing short-term visas for South Korean visitors, it said on Tuesday, the first retaliatory move against nations imposing COVID-19 curbs on travellers from China.
The embassy will adjust the policy subject to the lifting of South Korea’s “discriminatory entry restrictions” against China, it said on its official WeChat account.
Kyodo news agency, quoting multiple travel industry sources, said China has told travel agencies that it has stopped issuing new visas in Japan. An AFP journalist tweeted that the Chinese embassy in Japan released a statement confirming the curbs on Tuesday but removed it from its website within minutes.
With the virus let loose, China has stopped publishing daily infection tallies. It has been reporting five or fewer deaths a day since the policy U-turn, figures that have been disputed by the World Health Organization and are inconsistent with funeral reporting surging demand.
Some governments have raised concerns about Beijing’s data transparency as international experts predict at least 1 million deaths in China this year. Washington has also raised concerns about future potential mutations of the virus.
China dismisses criticism over its data as politically-motivated attempts to smear its “success” in handling the pandemic and said any future mutations are likely to be more infectious but less harmful.
“Since the outbreak, China has had an open and transparent attitude,” the foreign ministry’s Wang said.
PAST THE PEAK
State media downplayed the severity of the outbreak.
An article in Health Times, a publication managed by People’s Daily, the ruling Communist Party’s official newspaper, quoted several officials as saying infections have been declining in the capital Beijing and several Chinese provinces.
Kan Quan, director of the Office of the Henan Provincial Epidemic Prevention and Control, said nearly 90% of people in the central province of 100 million people had been infected as of Jan. 6.
Beijing acting mayor Yin Yong said the capital was also past its peak. Li Pan, from the Municipal Health Commission in the city of Chongqing, said the peak there was reached on Dec. 20.
In the eastern province of Jiangsu, the peak was reached on Dec. 22, while in neighbouring Zheijiang province “the first wave of infections has passed smoothly,” officials said.
Financial markets looked through the latest border curbs as mere inconvenience, with the yuan hitting a nearly five-month high.
Although daily flights in and out of China are still at a tenth of pre-COVID levels, businesses across Asia, from South Korean and Japanese shop owners to Thai tour bus operators and K-pop groups celebrated the prospect of more Chinese tourists.
Chinese shoppers spent $250 billion a year overseas before COVID.
PFIZER CRITICISM
The border rules were not the only COVID conflict brewing in China.
State media lashed out at Pfizer Inc (PFE.N) over the price for its COVID treatment Paxlovid.
“It is not a secret that U.S. capital forces have already accumulated quite a fortune from the world via selling vaccines and drugs, and the U.S. government has been coordinating all along,” nationalist tabloid Global Times said in an editorial.
Pfizer’s Chief Executive Albert Bourla said on Monday the company was in discussions with Chinese authorities about a price for Paxlovid, but not over licensing a generic version in China.
China’s abrupt change of course in COVID policies has caught many hospitals ill-equipped, while smaller cities were left scrambling to secure basic anti-fever drugs.
Yu Weishi, chairman of Youcare Pharmaceutical Group, told Reuters his firm boosted output of its anti-fever drugs five-fold to one million boxes a day in the past month.
Wang Lili, general manager at another pharmaceutical firm, CR Double Crane (600062.SS), told Reuters that intravenous drips were their most in-demand product.
“We are running 24/7,” Wang said.
Reporting by Beijing and Shanghai bureaus; Writing by Marius Zaharia; Editing by Raju Gopalakrishnan
Our Standards: The Thomson Reuters Trust Principles.
Chinese rush to renew passports as COVID border curbs lifted
BEIJING, Jan 9 (Reuters) – People joined long queues outside immigration offices in Beijing on Monday, eager to renew their passports after China dropped COVID border controls that had largely prevented its 1.4 billion residents from travelling for three years.
Sunday’s reopening is one of the last steps in China’s dismantling of its “zero-COVID” regime, which began last month after historic protests against curbs that kept the virus at bay but caused widespread frustration among its people.
Waiting to renew his passport in a line of more than 100 people in China’s capital, 67-year-old retiree Yang Jianguo told Reuters he was planning to travel to the United States to see his daughter for the first time in three years.
“She got married last year but had to postpone the wedding ceremony because we couldn’t go over to attend it. We’re very glad we can now go,” Yang said, standing alongside his wife.
China’s currency and stock markets strengthened on Monday, as investors bet the reopening could help reinvigorate a $17 trillion economy suffering its lowest growth in nearly half a century.
Beijing’s move to drop quarantine requirements for visitors is expected to boost outbound travel, as residents will not face those restrictions when they return.
But flights are scarce and several nations are demanding negative tests from visitors from China, seeking to contain an outbreak that is overwhelming many of China’s hospitals and crematoriums. China, too, requires pre-departure negative COVID tests from travellers.
China’s top health officials and state media have repeatedly said COVID infections are peaking across the country and they are playing down the threat now posed by the disease.
“Life is moving forward again!,” the official newspaper of the Communist Party, the People’s Daily, wrote in an editorial praising the government’s virus policies late on Sunday which it said had moved from “preventing infection” to “preventing severe disease”.
“Today, the virus is weak, we are stronger.”
Officially, China has reported just 5,272 COVID-related deaths as of Jan. 8, one of the lowest rates of death from the infection in the world.
But the World Health Organization has said China is under-reporting the scale of the outbreak and international virus experts estimate more than one million people in the country could die from the disease this year.
Shrugging off those gloomy forecasts, Asian shares climbed to a five-month high on Monday while China’s yuan firmed to its strongest level against the dollar since mid-August.
China’s blue-chip index (.CSI300) gained 0.7%, while the Shanghai Composite Index (.SSEC) rose 0.5% and Hong Kong’s Hang Seng Index (.HSI) climbed 1.6%.
“The ending of the zero-COVID policy is … going to have a major positive impact on domestic spending,” Ralph Hamers, group chief executive officer at UBS, told the Swiss bank’s annual Greater China conference on Monday.
“We believe there is a lot of opportunity for those committed to investing in China.”
‘HUGE RELIEF’
“It’s a huge relief just to be able to go back to normal … just come back to China, get off the plane, get myself a taxi and just go home,” Michael Harrold, 61, a copy editor in Beijing told Reuters at Beijing Capital International Airport on Sunday after he arrived on a flight from Warsaw.
Harrold said he had been anticipating having to quarantine and do several rounds of testing on his return when he left for Europe for a Christmas break in early December.
State broadcaster CCTV reported on Sunday that direct flights from South Korea to China were close to sold out. The report quickly shot to the most-read item on Chinese social media site Weibo.
In the near term, a spike in demand from travellers will be hampered by the limited number of flights to and from China, which are currently at a small fraction of pre-COVID levels.
Flight Master data showed that on Sunday, China had a total of 245 international inbound and outbound flights, compared with 2,546 flights on the same day in 2019 – a fall of 91%.
Korean Air said earlier this month that it was halting a plan to increase flights to China due to Seoul’s cautious stance towards Chinese travellers. South Korea like many other countries now requires travellers from China, Macau and Hong Kong to provide negative COVID test results before departure.
Taiwan, which started testing arrivals from China on Jan. 1, said on Monday that nearly 20% of those tested so far were positive for COVID.
China’s domestic tourism revenue in 2023 is expected to recover to 70-75% of pre-COVID levels, but the number of inbound and outbound trips is forecast to recover to only 30-40% of pre-COVID levels this year, China News reported on Sunday.
Reporting by Yew Lun Tian, Liz Lee, Josh Arslan, Eduardo Baptista and Sophie Yu in Beijing; Ben Blanchard in Taipei; Writing by John Geddie; Editing by Raju Gopalakrishnan
Our Standards: The Thomson Reuters Trust Principles.
Travel curbs rack up as COVID-hit China readies reopening
SHANGHAI/BEIJING, Jan 6 (Reuters) – More countries around the world are demanding that visitors from China take COVID tests, days before it drops border controls and ushers in an eagerly awaited return to travel for a population that has been largely stuck at home for three years.
From Sunday, China will end the requirement for inbound travellers to quarantine, the latest dismantling of its “zero-COVID” regime that began last month following historic protests against a suffocating series of mass lockdowns.
But the abrupt changes have exposed many of China’s 1.4 billion population to the virus for the first time, triggering an infection wave that is overwhelming some hospitals, emptying pharmacy shelves of medication and causing international alarm.
Greece, Germany and Sweden on Thursday joined more than a dozen countries to demand COVID tests from Chinese travellers, as the World Health Organisation said China’s official virus data was under-reporting the true extent of its outbreak.
Chinese officials and state media have struck a defiant tone, defending the handling of the outbreak, playing down the severity of the surge and denouncing foreign travel requirements for its residents.
Foreign Ministry spokesperson Mao Ning warned on Friday of possible reciprocal measures after the European Union recommended pre-departure testing for Chinese passengers.
“The EU should listen more to … rational voices and treat China’s epidemic prevention and control objectively and fairly,” Mao told a regular media briefing in Beijing.
The Global Times, a nationalistic tabloid published by the official People’s Daily, said in an editorial that some Western media and politicians “would never be satisfied” no matter what steps China takes.
The global aviation industry, battered by years of pandemic curbs, has also been critical of the decisions to impose testing on travellers from China. China will still require pre-departure testing for inbound travellers after Jan. 8.
HOSPITALS PACKED
Some Chinese citizens think the reopening has been too hasty.
“They should have taken a series of actions before opening up … and at the very least ensure that the pharmacies were well stocked,” a 70-year-old man who gave his surname as Zhao told Reuters in Shanghai.
China reported five new COVID deaths in the mainland for Thursday, bringing its official virus death toll to 5,264, one of the lowest in the world.
But that appeared to be at odds with the reality on the ground where funeral parlours are overwhelmed and hospitals are packed with elderly patients on respirators. In Shanghai, more than 200 taxi drivers are driving ambulances to meet demand for emergency services, the Shanghai Morning Post reported.
International health experts believe Beijing’s narrow definition of COVID deaths does not reflect a true toll that could rise to more than a million fatalities this year.
Investors are optimistic that China’s reopening can eventually reinvigorate a $17-trillion economy suffering its lowest growth in nearly half a century.
Those hopes, alongside policy measures to help revive its troubled property sector, lifted China’s yuan on Friday.
Meanwhile, both China’s blue-chip CSI300 Index (.CSI300) and the Shanghai Composite Index (.SSEC) have gained more than 2% in the first trading week of the year.
“While the re-opening is likely to be a bumpy affair amid surging COVID-19 cases and increasingly stretched health systems, our economists expect growth momentum across Asia to gather steam, led by China,” Herald van der Linde, HSBC’s head of equity strategy, Asia Pacific, said in a note.
SOUTHEAST ASIA OPEN
With the big Lunar New Year holidays late this month, the mainland is also set to open the border with its special administrative region of Hong Kong on Sunday, for the first time in three years.
Ferry services between the city and the gambling hub of Macau will resume on the same day.
Hong Kong’s Cathay Pacific Airways (0293.HK) said on Thursday it would more than double flights to mainland China. Flights to and from China remain at a tiny fraction of pre-COVID levels.
The WHO has warned that the holiday, which starts on Jan. 21 and usually brings the biggest human migration on the planet as people head home from cities to visit families in small towns and villages, could spark another infection wave in the absence of higher vaccination rates and other precautions.
Authorities expect 2.1 billion passenger trips, by road, rail, water and air, over the holiday, double last year’s 1.05 billion journeys during the same period.
The transport ministry has urged people to be cautious to minimise the risk of infection for elderly relatives, pregnant women and infants.
One region poised to be a major beneficiary of China’s opening is Southeast Asia, where countries have not demanded that Chinese visitors take COVID tests.
Except for airline wastewater testing by Malaysia and Thailand for the virus, the region’s 11 nations will treat Chinese travellers like any others.
As many as 76% of Chinese travel agencies ranked Southeast Asia as the top destination when outbound travel resumed, according to a recent survey by trade show ITB China.
Many people in China have taken to social media to announce their travel plans but some remain wary.
“You want to see the world, but the world might not want to see you,” wrote one WeChat user from Tianjin city.
Reporting by Brenda Goh in Shanghai, Bernard Orr, Eduardo Baptista, Martin Pollard and Liz Lee in Beijing, Farah Master in Hong Kong, and Xinghui Kok in Singapore; Writing by John Geddie and Greg Torode; Editing by Robert Birsel and Andrew Heavens
Our Standards: The Thomson Reuters Trust Principles.
COVID travel curbs against Chinese visitors ‘discriminatory’ -state media
BEIJING, Dec 30 (Reuters) – Chinese state-media said COVID-19 testing requirements imposed around the world in response to a surging wave of infections were “discriminatory”, in the clearest pushback yet against restrictions that are slowing down its re-opening.
Having kept its borders all but shut for three years, imposing a strict regime of lockdowns and relentless testing, China abruptly reversed course toward living with the virus on Dec. 7, and a wave of infections erupted across the country.
Some places have been taken aback by the scale of China’s outbreak and expressed scepticism over Beijing’s COVID statistics, with the United States, South Korea, India, Italy, Japan and Taiwan imposing COVID tests for travellers from China.
Malaysia said it would screen all international arrivals for fever.
“The real intention is to sabotage China’s three years of COVID-19 control efforts and attack the country’s system,” state-run tabloid Global Times said in an article late on Thursday, calling the restrictions “unfounded” and “discriminatory.”
China will stop requiring inbound travellers to go into quarantine from Jan. 8. But it will still demand a negative PCR test result within 48 hours before departure.
Italy on Thursday urged the rest of the European Union to follow its lead, but France, Germany and Portugal have said they saw no need for new restrictions, while Austria has stressed the economic benefits of Chinese tourists’ return to Europe.
Global spending by Chinese visitors was worth more than $250 billion a year before the pandemic.
The United States have raised concerns about potential mutations of the virus as it sweeps through the world’s most populous country, as well as over China’s data transparency.
The U.S. Center for Disease Control and Prevention is considering sampling wastewater from international aircraft to track any emerging new variants, the agency told Reuters.
China, a country of 1.4 billion people, reported one new COVID death for Thursday, same as the day before – numbers which do not match the experience of other countries after they re-opened.
China’s official death toll of 5,247 since the pandemic began compares with more than 1 million deaths in the United States. Chinese-ruled Hong Kong, a city of 7.4 million, has reported more than 11,000 deaths.
UK-based health data firm Airfinity said on Thursday around 9,000 people in China are probably dying each day from COVID. Cumulative deaths in China since Dec. 1 have likely reached 100,000, with infections totalling 18.6 million, it said.
‘EXCESS MORTALITY’
China’s chief epidemiologist Wu Zunyou said on Thursday that a team at the Chinese Center for Disease Control and Prevention will measure the difference between the number of deaths in the current wave of infections and the number of deaths expected had the epidemic never happened. By calculating the “excess mortality”, China will be able to work out what could have been potentially underestimated, Wu said.
China has said it only counts deaths of COVID patients caused by pneumonia and respiratory failure as COVID-related.
The relatively low death count is also inconsistent with the surging demand reported by funeral parlours in several Chinese cities.
The lifting of restrictions, after widespread protests against them in November, has overwhelmed hospitals and funeral homes across the country, with scenes of people on intravenous drips by the roadside and lines of hearses outside crematoria fuelling public concern.
Health experts say China has been caught ill-prepared by the U-turn in policies long championed by President Xi Jinping.
In December, tenders put out by hospitals for key equipment such as ventilators and patient monitors were two to three times higher than in previous months, according to a Reuters review，suggesting hospitals were scrambling to plug shortages.
Experts say the elderly in rural areas may be particularly vulnerable because of inadequate medical resources. Next month’s Lunar New Year festival, when hundreds of millions travel to their hometowns, will add to the risk.
ECONOMIC WOES
The world’s second-largest economy is expected to slow down further in the near term as factory workers and shoppers fall ill. Some economists predict a strong bounce back from a low base next year, but concerns linger that some of the damage made by three years of restrictions could be long-term.
Consumers may need time to recover their confidence and spending appetite after losing income during lockdowns, while the private sector may have used its expansion funds to cover losses incurred due to the restrictions.
Heavily indebted China will also face slowing demand in its main export markets, while its massive property sector is licking its wounds after a series of defaults.
China’s factory activity most likely cooled in December as rising infections began to affect production lines, a Reuters poll showed on Friday.
Chinese airlines, however, look set to be the early winners of the re-opening.
Writing by Marius Zaharia. Editing by Gerry Doyle
Our Standards: The Thomson Reuters Trust Principles.
Oil prices climb after OPEC+ keeps output cut targets, China eases COVID curbs
MELBOURNE, Dec 5 (Reuters) – Oil prices rose as much as 2% on Monday after OPEC+ nations held their output targets steady ahead of a European Union ban and a price cap kicking in on Russian crude.
At the same time, in a positive sign for fuel demand, more Chinese cities eased COVID-19 curbs over the weekend, though a patchwork easing in policies sowed confusion across the country on Monday.
Brent crude futures were last up 72 cents, or 0.8%, to $86.29 a barrel at 0430 GMT, while U.S. West Texas Intermediate (WTI) crude futures gained 70 cents, or 0.9%, to $80.68 a barrel.
The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, together called OPEC+, agreed on Sunday to stick to their October plan to cut output by 2 million barrels per day (bpd) from November through 2023.
Analysts said the OPEC+ decision was expected as major producers wait to see the impact of the EU import ban and Group of Seven (G7) $60-a-barrel price cap on seaborne Russian oil, with Russia threatening to cut supply to any country adhering to the cap.
“While OPEC remained steady on output over the weekend, I expect they will continue to balance the market,” said Baden Moore, head of commodity research at National Australia Bank.
“(A) Roll-off of the SPR releases, and implementation of the EU sanctions and price cap act to tighten the market, although we’d expect the market has already positioned for this outlook,” he said, referring to the U.S. strategic petroleum reserve.
The European Union will need to replace Russian crude with oil from the Middle East, West Africa and the United States, which should put a floor under oil prices at least in the near term, Wood Mackenzie vice president Ann-Louise Hittle said in a note.
“Prices are currently weighed down by expectations of slow demand growth, despite the EU oil import ban on Russian crude and the G7 price cap. The adjustment to the EU ban and price cap is likely to support prices temporarily,” Hittle said.
A key factor that has weighed on demand is China’s zero-COVID policy, but that appears to be easing now after protests were followed by several cities, including Beijing and Shanghai, relaxing restrictions to varying degrees.
Hittle added that the EU’s looming embargo on Russian oil products, in addition to crude oil, from Feb. 5 should support crude demand in the first quarter of 2023, as the market is short of diesel and heating oil.
Reporting by Sonali Paul in Melbourne and Emily Chow in Singapore; Editing by Cynthia Osterman and Kenneth Maxwell
Our Standards: The Thomson Reuters Trust Principles.
Chinese cities ease curbs but full zero-COVID exit seen some way off
BEIJING, Dec 4 (Reuters) – More Chinese cities including Urumqi in the far west announced an easing of coronavirus curbs on Sunday as China tries to make its zero-COVID policy more targeted and less onerous after unprecedented protests against restrictions last weekend.
Urumqi, the capital of the Xinjiang region and where the protests first erupted, will reopen malls, markets, restaurants and other venues from Monday, authorities said, ending strict lockdowns after months.
There was no sign of any significant unrest this weekend, although police were out in force in the Liangmaqiao area of Beijing and in Shanghai around Wulumuqi Road, which is named after Urumqi. Both sites saw protests a week ago.
A deadly fire last month in Urumqi sparked dozens of protests against COVID curbs in over 20 cities after some social media users said victims had been unable to escape the blaze because their apartment building was locked down. Authorities denied that.
The protests were an unprecedented show of civil disobedience in mainland China since President Xi Jinping took power in 2012.
In the days since, numerous cities have announced the easing of lockdowns, testing requirements, and quarantine rules.
Vice Premier Sun Chunlan, who oversees COVID efforts, said last week the ability of the virus to cause disease was weakening – a change in messaging that aligns with what many health authorities around the world have said for more than a year.
China is set to further announce a nationwide easing of testing requirements as well as allowing positive cases and close contacts to isolate at home under certain conditions, people familiar with the matter told Reuters last week.
RULES LIFTED
For the time being, steps to ease restrictions have varied across the country.
People in Zhengzhou, the central city home to the world’s largest iPhone plant which was last month rocked by violent unrest, will no longer have to show COVID test results to take public transport, taxis and to visit “public areas”, authorities said on Sunday.
Karaoke bars, beauty salons, internet cafes and other indoor venues can reopen but must check for a negative 48-hour COVID test result.
In Shanghai from Monday a negative COVID test will no longer be required to take public transport and visit parks, authorities announced on Sunday.
Elsewhere both Nanning, capital of the southern region of Guangxi and Wuhan, the central city where the pandemic began in 2019, on Sunday cancelled a requirement for a negative COVID test to take the subway.
Guangzhou’s Haizhu district, which experienced violent clashes last month, said Sunday that henceforth it advises people with no COVID symptoms not to get tested for the virus unless they belong to certain special groups such as frontline workers, or those with a red or yellow code.
On Saturday in Beijing, authorities said the purchase of fever, cough and sore throat medicines no longer required registration. The restriction had been imposed because authorities believed people were using the medication to hide COVID infections.
Authorities in various districts in the capital have in recent days announced that people who test positive for the virus can quarantine at home.
Some inconsistencies as the restrictions are eased have angered people, including a requirement in some places for a negative COVID test even though mass testing centres were closing.
In Beijing and Wuhan that caused lengthy queues at the few remaining testing booths.
“Are they stupid or just plain mean?” one social media user asked. “We shouldn’t shut down COVID testing stations until we get rid of the COVID test pass.”
New daily case numbers dropped nationwide to 31,824, authorities said on Sunday, which may be due in part to fewer people being tested. Authorities also reported two new COVID deaths.
‘PREPARING TO EXIT ZERO-COVID’
Xi’s zero-COVID policy has had a devastating impact on the world’s second-largest economy and roiled global supply chains.
China argues the policy, which has all-but-shut its borders to travel, is necessary to save lives and prevent the health care system from being overwhelmed.
Despite the easing of restrictions, many experts said China was unlikely to begin significant reopening before March at the earliest, given the need to ramp up vaccinations, especially among its vast elderly population.
“Although there have been quite a few local changes to COVID policies lately, we do not interpret them as China abandoning zero-COVID policy just yet,” Goldman Sachs said in a note on Sunday.
“Rather, we see them as clear evidence of the Chinese government preparing for an exit, and trying to minimize the economic and social cost of COVID control in the meantime. The preparations may last a few months and there are likely to be challenges along the way.”
Estimates for how many deaths China could see if it pivots to a full reopening have ranged from 1.3 million to more than 2 million, though some researchers said the death toll could be reduced sharply if there was a focus on vaccination.
Authorities recently announced they would speed up COVID vaccinations for elderly people but many remain reluctant to get the jab.
“Some people have doubts about the safety and effectiveness of the country’s new coronavirus vaccine,” an article in the ruling Communist Party’s official People’s Daily said on Sunday.
“Experts say this perception is wrong,” it said, adding that domestically made vaccines were safe.
Foreign COVID vaccines are not approved in China and Xi is unwilling to change that, U.S. Director of National Intelligence Avril Haines said on Saturday.
Reporting by Martin Quin Pollard; Additional reporting by the Beijing Newsroom; Editing by Tony Munroe, Lincoln Feast, Kirsten Donovan
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