Chinese stocks rally after the country's top pandemic official signals a softening of the country's draconian Covid-zero stance
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- Vice Premier Sun Chunlan said China's pandemic is at a "new stage" that comes with new tasks.
- Sun's words carry weight as she's the face of China's hardline Covid-zero approach.
- Hong Kong and Chinese stocks are higher on optimism China is eyeing an exit from a Covid-zero policy.
Hong Kong and Chinese stocks rallied Thursday after a top Chinese official — who oversees the country's pandemic management — appeared to tone down the country's hardline Covid-zero approach.
Vice Premier Sun Chunlan was speaking at a National Health Commission meeting on Wednesday, where she said China's pandemic is now at a "new stage" that comes with new tasks, according to an official government statement.
She said that's because the Omicron variant has become less able to cause disease, and as many more people have been vaccinated. China has also become more experienced in the prevention and control of COVID-19, she added.
That seems to hint at "some plans being underway for reopening next year," wrote Yeap Jun Rong, a market strategist at online trading platform IG on Thursday.
Sun's softening on China's draconian Covid-zero stance carries weight because she's seen as the face of the hardline approach. The shift is also significant because it followed rare public protests in China last weekend against the country's relentless COVID-19 curbs after three years of the pandemic.
Hong Kong's Hang Seng Index was 1.6% higher at midday, while the Hang Seng China Enterprises rose 1.25%. The Shanghai Composite was 0.65% higher.
As the world's second-largest economy after the US, China has been under pressure from pandemic restrictions that are into their third year. Economic activity contracted in November, as official gauges of China's manufacturing and service activities contracted from a month ago amid a record surge in Covid cases.
"Rising Covid cases, together with shrinking exports, added pressure on exporters," economists from Dutch bank ING wrote in a Thursday note. "Local government officials will likely exercise Covid measures with an intent to reduce their impact on the economy even if there are no further imminent changes in the overall Covid rules."
Apart from the optimism about a potential reopening of the Chinese economy, shares elsewhere in Asia were also propped up by US Federal Reserve chair Jerome Powell, who signaled on Wednesday the central bank is likely to slow its interest rate hike cycle as soon as December.
Japan's Nikkei 225 closed 0.9% higher, while South Korea's Kospi closed 0.3% higher. India's Sensex was last up 0.5% at 2.24 a.m. EST.
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