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Business

Goldman job cuts hit investment banking, global markets hard -source

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  • Mass redundancies, spending review beckons for Wall Street giant
  • Cuts to all major divisions expected, globally
  • Restructuring in Asian wealth unit kicks off Wednesday’s layoffs

NEW YORK/LONDON/HONG KONG, Jan 12 (Reuters) – Goldman Sachs (GS.N) began laying off staff on Wednesday in a sweeping cost-cutting drive, with around a third of those affected coming from the investment banking and global markets division, a source familiar with the matter said.

The long-expected jobs cull at the Wall Street titan is expected to represent the biggest contraction in headcount since the financial crisis. It is likely to affect most of the bank’s major divisions, with its investment banking arm facing the deepest cuts, a source told Reuters this month.

Just over 3,000 employees will be let go, the source, who could not be named, said on Monday. A separate source confirmed on Wednesday that cuts had started.

“We know this is a difficult time for people leaving the firm,” a Goldman Sachs statement on Wednesday said.

“We’re grateful for all our people’s contributions, and we’re providing support to ease their transitions. Our focus now is to appropriately size the firm for the opportunities ahead of us in a challenging macroeconomic environment.”

The cuts are part of broader reductions across the banking industry as a possible global recession looms. At least 5,000 people are in the process of being cut from various banks. In addition to the 3,000 from Goldman, Morgan Stanley (MS.N) has cut about 2% of its workforce, or 1,600 people, a source said last month while HSBC (HSBA.L) is shedding at least 200, sources previously said.

Last year was challenging across groups including credit, equities, and investment banking broadly, said Paul Sorbera, president of Wall Street recruitment firm Alliance Consulting. “Many didn’t make budgets.”

“It’s just part of Wall Street,” Sorbera said. “We’re used to seeing layoffs.”

The latest cuts will reduce about 6% of Goldman’s headcount, which stood at 49,100 at the end of the third quarter.

[1/3] A trader works at the Goldman Sachs stall on the floor of the New York Stock Exchange, April 16, 2012. REUTERS/Brendan McDermid/File Photo

The firm’s headcount had added more than 10,000 jobs since the coronavirus pandemic as markets boomed.

The reductions come as U.S. banking giants are forecast to report lower profits this week. Goldman Sachs is expected to report a net profit of $2.16 billion in the fourth-quarter, according to a mean forecast by analysts on Refinitiv Eikon, down 45% from $3.94 billion net profit in the same period a year earlier.

Shares of Goldman Sachs have partially recovered from a 10% fall last year. The stock closed up 1.99% on Wednesday, up around 6% year-to-date.

LAYOFFS AROUND GLOBE

Goldman’s layoffs began in Asia on Wednesday, where Goldman completed cutting back its private wealth management business and let go of 16 private banking staff across its Hong Kong, Singapore and China offices, a source with knowledge of the matter said.

About eight staff were also laid off in Goldman’s research department in Hong Kong, the source added, with layoffs ongoing in the investment banking and other divisions.

At Goldman’s central London hub, rainfall lessened the prospect of staff huddles. Several security personnel actively patrolled the building’s entrance, but few people were entering or leaving the property. A glimpse into the bank’s recreational area just beyond its lobby showed a handful of staffers in deep conversation but few signs of drama. Wine bars and eateries local to the office were also short of post-lunch trade, in stark contrast to large-scale layoffs of the past when unlucky staffers would typically gather to console one another and plan their next career moves.

In New York, employees were seen streaming into headquarters during the morning rush.

Goldman’s redundancy plans will be followed by a broader spending review of corporate travel and expenses, the Financial Times reported on Wednesday, as the U.S. bank counts the costs of a massive slowdown in corporate dealmaking and a slump in capital markets activity since the war in Ukraine.

The company is also cutting its annual bonus payments this year to reflect depressed market conditions, with payouts expected to fall about 40%.

Reporting by Sinead Cruise and Iain Withers in London, Selena Li in Hong Kong, Scott Murdoch in Sydney and Saeed Azhar in New York; Editing by Josie Kao and Christopher Cushing

Our Standards: The Thomson Reuters Trust Principles.

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World

China imposes transit curbs for S.Korea, Japan in growing COVID spat

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  • New curbs for S.Korea, Japan nationals transiting China
  • China says visa suspensions for S.Korea, Japan “reasonable”
  • Escalating diplomatic spat may complicate economic relations
  • Social media users lash out at S.Korea’s “insulting” COVID curbs

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.

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World

China retaliates against South Korea’s COVID curbs, says outbreaks past peaks

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  • China embassy decries “discriminatory” S.Korea border rules
  • Some cities say peak of COVID infections was last month
  • Chinese state media criticise Pfizer over Paxlovid price

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.

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Business

Oil jumps 3% on demand optimism as China borders reopen

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  • China reopens borders in final farewell to zero-COVID
  • Hopes of slower U.S. interest rate hikes boost risk sentiment
  • Oil’s gain follows more than 8% drop last week

LONDON, Jan 9 (Reuters) – Oil extended gains on Monday, rising more than 3% after China’s move to reopen its borders boosted the outlook for fuel demand and overshadowed global recession concerns.

The rally was part of a wider boost for risk sentiment supported by both the reopening of the world’s biggest crude importer and hopes for less-aggressive increases to U.S. interest rates, with equities rising and the dollar weakening.

Brent crude was up $2.38, or 3.03%, at $80.95 a barrel by 1312 GMT while U.S. West Texas Intermediate crude rose $2.36, or 3.2%, to $76.13.

“If recession is avoided, global oil demand and demand growth will remain resilient,” said Tamas Varga of oil broker PVM, adding that developments in China were the main reason for Monday’s gains.

“The gradual reopening of the Chinese economy will provide an additional and immeasurable layer of price support,” he said.

The rally followed a drop last week of more than 8% for both oil benchmarks, their biggest weekly declines at the start of a year since 2016.

As part of a “new phase” in the fight against COVID-19, China opened its borders over the weekend for the first time in three years. Domestically, about 2 billion trips are expected during the Lunar New Year season, nearly double last year’s and 70% of 2019 levels, Beijing says.

In oil-specific developments, China issued a second batch of 2023 crude import quotas, according to sources and documents reviewed by Reuters, raising the total for this year by 20% from the same time last year.

Despite Monday’s oil rebound, there is still concern that the massive flow of Chinese travellers could cause another surge in COVID infections while broader economic concerns also linger.

Those concerns are reflected in oil’s market structure. Both the near-term Brent and U.S. crude contracts are trading at a discount to the next month, a structure known as contango, which typically indicates bearish sentiment. ,

Reporting by Alex Lawler
Additional reporting by Florence Tan and Jeslyn Lerh
Editing by David Goodman

Our Standards: The Thomson Reuters Trust Principles.

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World

Chinese rush to renew passports as COVID border curbs lifted

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  • China dropped quarantine for visitors on Sunday
  • Latest move in easing that has let virus run free
  • Several nations demand COVID tests from China travellers
  • Chinese stocks, yuan rally on growth hopes

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.

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World

China reopens borders in final farewell to zero-COVID

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HONG KONG/BEIJING, Jan 8 (Reuters) – Travellers began streaming into mainland China by air, land and sea on Sunday, many eager for long-awaited reunions, as Beijing opened borders that have been all but shut since the start of the COVID-19 pandemic.

After three years, mainland China opened sea and land crossings with Hong Kong and ended a requirement for incoming travellers to quarantine, dismantling a final pillar of a zero-COVID policy that had shielded China’s people from the virus but also cut them off from the rest of the world.

China’s easing over the past month of one of the world’s tightest COVID regimes followed historic protests against a policy that included frequent testing, curbs on movement and mass lockdowns that heavily damaged the second-biggest economy.

Long queues formed at Hong Kong’s international airport for flights to mainland cities including Beijing, Tianjin and Xiamen and some Hong Kong media outlets estimated that thousands of people were travelling across.

“I’m so happy, so happy, so excited. I haven’t seen my parents for many years,” said Hong Kong resident Teresa Chow as she and dozens of other travellers prepared to cross into mainland China from Hong Kong’s Lok Ma Chau checkpoint early on Sunday.

“My parents are not in good health, and I couldn’t go back to see them even when they had colon cancer, so I’m really happy to go back and see them now,” she said, adding that she plans to head to her hometown in eastern China’s Ningbo city.

Investors hope the reopening will eventually reinvigorate a $17-trillion economy suffering its lowest growth in nearly half a century. But the abrupt policy reversal has triggered a massive wave of infections that is overwhelming some hospitals and causing business disruptions.

The border opening follows Saturday’s start of “chun yun”, the first 40-day period of Lunar New Year travel, which before the pandemic was the world’s largest annual migration of people returning to their hometowns of taking holidays with family.

Some 2 billion trips are expected to be made this season, nearly double last year’s movement and recovering to 70% of 2019 levels, the government says.

Many Chinese are also expected to start travelling abroad, a long-awaited shift for tourist spots in countries such as Thailand and Indonesia, though several governments – worried about China’s COVID spike – are imposing curbs on travellers from the country.

Travel will not quickly return to pre-pandemic levels due to such factors as a dearth of international flights, analysts say.

China on Sunday also resumed issuing passports and travel visas for mainland residents, and ordinary visas and residence permits for foreigners. Beijing has quotas on the number of people who can travel between Hong Kong and China each day.

VISITORS, HOMECOMINGS

At the Beijing Capital International Airport, families and friends exchanged emotional hugs and greetings with passengers arriving from Hong Kong, Warsaw and Frankfurt at the airport’s terminal 3, meetings at the arrival hall that would have been impossible just a day ago due to a now cancelled requirement for travellers from abroad to quarantine.

“I’ve been looking forward to the reopening for a long time. Finally we are reconnected with the world. I’m thrilled, I can’t believe it’s happening,” said a business woman surnamed Shen, 55, who flew in from Hong Kong.

Other people waiting at the airport included a group of females fans carrying long lens cameras in hope of catching a glimpse of South Korean boy band Tempest, the first idol group from South Korea to enter China in the past three years.

“It’s so good to see them in person! They are much more handsome and taller than I expected,” a 19-year-old who gave her name as Xiny told Reuters after chasing the seven-member boyband, who flew in from Seoul via the Chinese city of Dalian.

“With quarantine restrictions lifted, it’s going to be so much more convenient to fly over to see them, and for them to come to Beijing,” she said.

PROTESTS

Such scenes of reunions, however, jarred with others of protests in some cities around China over the weekend, in a reminder of how the economy remains under strain.

Protests are not rare in China, which has over the years seen people come out in large numbers over issues such as financial or property scams. But authorities have been on higher alert after widespread protests in Chinese cities and top universities at the end of November against COVID restrictions.

On Saturday, hundreds of Tesla (TSLA.O) owners gathered at the automaker’s showrooms and distribution centres in China to protest against its decision to slash prices for the second time in three months, a move it made to spur sales at a time of faltering demand in the world’s largest auto market.

(This story has been refiled to correct paragraph 9 to say 2 billion trips to be made, not 2 billion people to travel)

Reporting by Joyce Zhou in Hong Kong, Yew Lun Tian and Josh Arslan in Beijing; Writing by Brenda Goh in Shanghai; Editing by William Mallard

Our Standards: The Thomson Reuters Trust Principles.

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World

China’s ‘great migration’ kicks-off under shadow of COVID

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SHANGHAI, Jan 7 (Reuters) – China on Saturday marked the first day of “chun yun”, the 40-day period of Lunar New Year travel known pre-pandemic as the world’s largest annual migration of people, bracing for a huge increase in travellers and the spread of COVID-19 infections.

This Lunar New Year public holiday, which officially runs from Jan. 21, will be the first since 2020 without domestic travel restrictions.

Over the last month China has seen the dramatic dismantling of its “zero-COVID” regime following historic protests against a policy that included frequent testing, restricted movement, mass lockdowns and heavy damage to the world’s No.2 economy.

Investors are hoping that the reopening will eventually reinvigorate a $17-trillion economy suffering its lowest growth in nearly half a century.

But the abrupt changes have exposed many of China’s 1.4 billion population to the virus for the first time, triggering a wave of infections that is overwhelming some hospitals, emptying pharmacy shelves of medicines and causing long lines to form at crematoriums.

The Ministry of Transport said on Friday that it expects more than 2 billion passengers to take trips over the next 40 days, an increase of 99.5% year-on-year and reaching 70.3% of trip numbers in 2019.

There was mixed reaction online to that news, with some comments hailing the freedom to return to hometowns and celebrate the Lunar New Year with family for the first time in years.

Many others, however, said they would not travel this year, with worry of infecting elderly relatives a common theme.

“I dare not go back to my hometown, for fear of bringing the poison back,” said one such comment on the Twitter-like Weibo.

There are widespread concerns that the great migration of workers in cities to their hometowns will cause a surge in infections in smaller towns and rural areas that are less well-equipped with ICU beds and ventilators to deal with them.

Authorities say they are boosting grassroots medical services, opening more rural fever clinics and instituting a “green channel” for high risk patients, especially elderly people with underlying health conditions, to be transferred from villages directly to higher level hospitals.

“China’s rural areas are wide, the population is large, and the per capita medical resources are relatively insufficient,” National Health Commission spokesman Mi Feng said on Saturday.

“It’s necessary to provide convenient services, accelerate vaccination for the elderly in rural areas and the construction of grassroots lines of defense.”

INFECTION PEAK REACHED

Some analysts are now saying the current wave of infections may have already peaked.

Ernan Cui, an analyst at Gavekal Dragonomics in Beijing, cited several online surveys as indicating that rural areas were already more widely exposed to COVID infections than initially thought, with an infection peak already reached in most regions, noting there was “not much difference between urban and rural areas.”

On Sunday China will reopen its border with Hong Kong and will also end a requirement for travellers coming from abroad to quarantine. That effectively opens the door for many Chinese to travel abroad for the first time since borders slammed shut nearly three years ago, without fear of having to quarantine on their return.

Jillian Xin, who has three children and who lives in Hong Kong, said she was “incredibly excited” about the border opening, especially as it means seeing family in Beijing more easily.

“For us, the border opening means my kids can finally meet their grandparents for the first time since the pandemic began,” she said. “Two of our children have never been able to see their grandpa, so we cannot wait for them to meet.”

China’s surge in cases has caused concern internationally and more than a dozen countries are now demanding COVID tests from travellers from China. The World Health Organisation said on Wednesday that China’s COVID data underrepresents the number of hospitalisations and deaths from the disease.

Chinese officials and state media have defended the handling of the outbreak, playing down the severity of the surge and denouncing foreign travel requirements for its residents.

On Saturday in Hong Kong, people who had made appointments had to queue for about 90 minutes at a centre for PCR tests needed for travel to countries including mainland China.

TREATMENT TO THE FORE

For much of the pandemic, China poured resources into a vast PCR testing program to track and trace COVID-19 cases, but the focus is now shifting to vaccines and treatment.

In Shanghai, for example, the city government on Friday announced an end to free PCR tests for residents from Jan. 8.

A circular published by four government ministries Saturday signalled a reallocation of financial resources to treatment, outlining a plan for public finances to subsidise 60% of treatment costs until March 31.

Meanwhile, sources told Reuters that China is in talks with Pfizer Inc (PFE.N) to secure a licence that will allow domestic drugmakers to manufacture and distribute a generic version of the U.S. firm’s COVID antiviral drug Paxlovid in China.

Many Chinese have been attempting to buy the drug abroad and have it shipped to China.

On the vaccine front, China’s CanSino Biologics Inc (6185.HK) announced it has begun trial production for its COVID mRNA booster vaccine, known as CS-2034.

China has relied on nine domestically-developed vaccines approved for use, including inactivated vaccines, but none have been adapted to target the highly-transmissible Omicron variant and its offshoots currently in circulation.

The overall vaccination rate in the country is above 90%, but the rate for adults who have had booster shots drops to 57.9%, and to 42.3% for people aged 80 and older, according to government data released last month.

China reported three new COVID deaths in the mainland for Friday, bringing its official virus death toll since the pandemic began to 5,267, one of the lowest in the world.

International health experts believe Beijing’s narrow definition of COVID deaths does not reflect a true toll, and some predict more than a million deaths this year.

Reporting by Casey Hall in Shanghai, Julie Zhu in Hong Kong and Kevin Huang
Additional reporting by Jindong Zhang
Editing by Tony Munroe and Frances Kerry

Our Standards: The Thomson Reuters Trust Principles.

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Business

Eisai, Biogen receives U.S. FDA approval for Alzheimer’s drug, applies for full approval

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Jan 7 (Reuters) – The U.S. Food and Drug Administration on Friday approved the Alzheimer’s drug lecanemab developed by Eisai Co Ltd (4523.T) and Biogen Inc (BIIB.O) for patients in the earliest stages of the mind-wasting disease.

Eisai and Biogen said on Saturday the Japanese drugmaker had applied for full FDA approval of the drug.

The drug, to be sold under the brand Leqembi, belongs to a class of treatments that aims to slow the advance of the neurodegenerative disease by removing sticky clumps of the toxic protein beta amyloid from the brain.

Nearly all previous experimental drugs using the same approach had failed.

“Today’s news is incredibly important,” said Dr. Howard Fillit, chief science officer of the Alzheimer’s Drug Discovery Foundation. “Our years of research into what is arguably the most complex disease humans face is paying off and it gives us hope that we can make Alzheimer’s not just treatable, but preventable.”

Eisai said the drug would launch at an annual price of $26,500. Biogen shares, which had been halted, were up 3% at $279.40.

The Japanese company said it also plans to apply for marketing authorization for Leqembi in Japan and the European Union by the end of its business year on March 31.

Eisai estimated the number of U.S. patients eligible for the drug would reach around 100,000 within three years, increasing gradually from there over the medium to long term.

Dr. Erik Musiek, A Washington University neurologist at Barnes-Jewish Hospital, said he was “pleasantly surprised” by the drug’s price.

“Considering the marketplace and the fact that we have no other good disease-modifying treatments, I think it’s in the ballpark of what I would expect,” he said.

Initial patient access will be limited by a number of factors including reimbursement restrictions by Medicare, the U.S. government insurance program for Americans aged 65 and older who represent some 90% of individuals likely to be eligible for Leqembi.

“Without Centers for Medicare & Medicaid Services (CMS) and insurance coverage … access for those who could benefit from the newly-approved treatment will only be available to those who can pay out-of-pocket,” the Alzheimer’s Association said in a statement.

Leqembi was approved under the FDA’s accelerated review process, an expedited pathway that speeds access to a drug based on its impact on underlying disease-related biomarkers believed to predict a clinical benefit.

“This treatment option is the latest therapy to target and affect the underlying disease process of Alzheimer’s instead of only treating the symptoms of the disease,” FDA neuroscience official Billy Dunn said in a statement.

CMS said on Friday that current coverage restrictions for drugs approved under the accelerated pathway could be reconsidered based on its ongoing review of available information.

If the drug receives traditional FDA approval, CMS said it would provide broader coverage. Eisai officials have said the company plans to submit data from a recent successful clinical trial in 1,800 patients as the basis for a full standard review of Leqembi.

The CMS decision was largely in response to a previous Alzheimer’s treatment from Eisai and Biogen. Aducanumab, sold under the brand name Aduhelm, won accelerated approval in 2021 with little evidence that the drug slowed cognitive decline and despite objections by the FDA’s outside experts.

Biogen initially priced Aduhelm at $56,000 per year before cutting the price in half. With limited acceptance and insurance coverage, sales were only $4.5 million in the first nine months of 2022.

Lecanemab is intended for patients with mild cognitive impairment or early Alzheimer’s dementia, a population that doctors believe represents a small segment of the estimated 6 million Americans currently living with the memory-robbing illness.

To receive the treatment, patients will need to undergo testing to show they have amyloid deposits in their brain – either through brain imaging or a spinal tap. They will also need to undergo periodic MRI scans to monitor for brain swelling, a potentially serious side effect associated with this type of drug.

The medicine’s label says doctors should exercise caution if lecanemab patients are given blood clot preventers. This could be a safety risk, according to an autopsy analysis published this week of a lecanemab patient who had a stroke and later died.

In the large trial of lecanemab, which is given by infusion, the drug slowed the rate of cognitive decline in patients with early Alzheimer’s by 27% compared to a placebo. Nearly 13% of patients treated with Leqembi in the trial had brain swelling.

Dr. Babak Tousi, a neuro-geriatrician at the Cleveland Clinic, said the approval will make a “big difference” in the field because it is based on biomarkers rather than just symptoms.

“It’s going to change how we make a diagnosis for Alzheimer’s disease, with more accuracy,” he said.

Tousi acknowledged that the benefit of the drug will likely be modest. “Still, it is a benefit that we were not able to achieve” before this approval.

Reporting by Deena Beasley in Los Angeles and Bhanvi Satija in Bengaluru, additional reporting Jaiveer Shekhawat; Editing by Bill Berkrot, David Gregorio and William Mallard

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Travel curbs rack up as COVID-hit China readies reopening

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  • China to drop quarantine for overseas visitors on Sunday
  • Greece joins nations imposing travel curbs on China
  • Travel rush, holidays could inflame virus outbreak

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

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China defends its COVID response after WHO, Biden concerns

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  • China says outbreak is controllable
  • WHO says China under-reporting hospital admissions, deaths
  • Official data at odds with packed hospitals, crematoriums
  • Asian shares up on hopes China reopening stimulates growth

BEIJING/SHANGHAI, Jan 5 (Reuters) – China defended on Thursday its handling of its raging COVID-19 outbreak after U.S. President Joe Biden voiced concern and the World Health Organisation (WHO) said Beijing was under-reporting virus deaths.

The WHO’s emergencies director, Mike Ryan, said on Wednesday in some of the U.N. health agency’s most critical remarks to date, that Chinese officials were under-representing data on several fronts.

China scrapped its stringent COVID controls last month after protests against them, abandoning a policy that had shielded its 1.4 billion population from the virus for three years.

China’s foreign ministry spokesperson Mao Ning told a regular press briefing in Beijing that China had transparently and quickly shared COVID data with the WHO.

Mao said that China’s “epidemic situation is controllable” and that it hoped the WHO would “uphold a scientific, objective, and impartial position”.

“Facts have proved that China has always, in accordance with the principles of legality, timeliness, openness and transparency, maintained close communication and shared relevant information and data with the WHO in a timely manner,” Mao said.

China reported one new COVID death in the mainland for Wednesday, compared with five a day earlier, bringing its official death toll to 5,259.

Ryan said on Wednesday the numbers China was publishing under-represented hospital admissions, intensive care unit patients and deaths.

Hours later, U.S. President Joe Biden also raised concern about China’s handling of a COVID outbreak that is filling hospitals and overwhelming some funeral homes.

“They’re very sensitive … when we suggest they haven’t been that forthcoming,” Biden told reporters while on a visit to Kentucky.

The French health minister voiced similar fears while German Health Minister Karl Lauterbach voiced concern about a new COVID subvariant linked to growing hospitalisations in the northeastern United States.

CROWDED HOSPITAL

The United States is one of more than a dozen countries that have imposed restrictions on travellers from China.

China has criticised such border controls as unreasonable and unscientific and the government said on Thursday that its border with its special administrative region of Hong Kong would also reopen on Sunday, for the first time in three years.

Millions of people will be travelling within China later this month for the Lunar New Year holiday.

China’s government has played down the severity of the situation in recent days and the state-run Global Times said in an article on Wednesday that COVID had peaked in several cities including the capital, Beijing, citing interviews with doctors.

But at a hospital in Shanghai’s suburban Qingpu district, patients on beds lined the corridors of the emergency treatment area and main lobby on Thursday, most of them elderly and several breathing with oxygen tanks, a Reuters witness said.

A notice on a board advised that patients would have to wait an average of five hours to be seen.

Staff declared one elderly patient dead and pinned a note to the body on the floor stating the cause of death “respiratory failure”.

Police patrolled outside a nearby crematorium, where a stream of mourners carried wreathes and waited to collect the ashes of loved ones.

DATA GAPS

With one of the lowest official COVID death tolls in the world, China has been routinely accused of under-reporting for political reasons.

In December last year, the WHO said it had received no data from China on new COVID hospitalisations since Beijing lifted its zero-COVID policy.

In its latest weekly report, the WHO said China reported 218,019 new weekly COVID cases as of Jan. 1, adding that gaps in data might be due to authorities simply struggling to tally cases.

The methods for counting COVID deaths have varied across countries since the pandemic first erupted in the central Chinese city of Wuhan in late 2019.

Chinese health officials have said only deaths caused by pneumonia and respiratory failure in patients who had the virus are classified as COVID deaths.

But disease experts outside China have said its approach would miss several other widely recognised types of fatal COVID complications, from blood clots to heart attacks as well as sepsis and kidney failure.

International health experts predict at least 1 million COVID-related deaths in China this year without urgent action. British-based health data firm Airfinity has estimated about 9,000 people in China are probably dying each day from COVID.

Surging COVID infections are hurting demand in China’s $17 trillion economy, with a private-sector survey on Thursday showing services activity shrank in December.

But investors remain optimistic that China’s dismantling of COVID controls will eventually help revive growth that has slid to its lowest rate in nearly half a century. Those hopes were seen lifting Asian equity markets (.MIAPJ0000PUS) on Thursday.

“China reopening has a big impact … worldwide,” said Joanne Goh, an investment strategist at DBS Bank in Singapore, adding the move would spur tourism and consumption and ease supply-chain crunches seen last year.

(This story has been refiled to correct punctuation in headline.)

Reporting by Liz Lee, Eduardo Baptista and Bernard Orr in Beijing, Brenda Goh in Shanghai, Tom Westbrook in Singapore, Steve Holland in Hebron, Kentucky; Writing by John Geddie and Greg Torode; Editing by Robert Birsel

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