(Bloomberg) -- China is set to announce a further relaxation of Covid control measures as soon as today - including allowing some infected people to home quarantine as a nationwide policy, and reining in unnecessary testing - according to people familiar with the matter, as the government continues to quickly ease its zero-tolerance strategy amid growing public discontent.
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In one of the key changes to be announced this week, low-risk patients who test positive will be allowed to quarantine at home instead of being sent to an isolation facility, the people said, asking not to be named because they're not authorized to speak publicly. PCR testing will also be dialed back except for high-risk groups, they said.
China may also look at reducing or even scrapping the need for people to scan health codes via a smartphone app whenever they enter public places, one of the people said.
The National Health Commission could not immediately be reached for comment.
The onshore yuan extended gains to trade 0.3% higher around 6.98 per dollar on the news, while the yield on 10-year government bonds dropped one basis point.
China's planned changes come after major cities from Beijing to Shanghai and Shenzhen in the past two weeks rapidly wound back policies such as mass testing and broad, sweeping lockdowns that have been hallmarks of China's punishing approach. The adherence to Covid Zero has hobbled the economy, led to unprecedented social unrest in recent weeks, and left the world's second-largest economy increasingly isolated from the rest of the world, which has mostly moved on from the pandemic.
The home isolation concession was first introduced last week in Beijing, the capital, as centralized quarantine facilities ran out of space amid surging cases. Expanding the rule nationwide so quickly represents a major shift away from a bedrock practice of the elimination strategy.
When the virus first emerged in the central Chinese city of Wuhan in 2019, it was only when authorities started moving all infected people into quarantine camps that the outbreak was stamped out. It soon became a central tenet in places that managed to eliminate spread in the first phase of the pandemic, from Singapore to Australia.
How China Looks to Be Easing Its Covid Zero Strategy: QuickTake
Reuters earlier reported that 10 new Covid easing measures would be announced this week and reopening rumors have continued to swirl among Chinese investors, sparking the best monthly rally in Hong Kong-listed Chinese stocks in November since 2003.
The proposed moves also suggest the government is willing to tolerate higher case numbers to avoid more social and economic turmoil. The nation reported 24,440 cases for Tuesday, down from 27,164 for Monday, though that may understate the actual total given the end of mass testing drives. Infections have fallen each of the past nine days since peaking at a record 38,808 on Nov. 27.
The willingness to abide high case numbers is a far cry from earlier in the year, when neighborhoods or entire cities were locked down at the emergence of a single case. Shanghai endured a grueling two-month lockdown earlier this year that confined most of the city's 25 million people to their homes, and disrupted companies from Tesla Inc. to Sony Corp.
A more relaxed approach to the virus may also help shift public perception of Covid-19 from a serious health threat to a more commonplace illness, a crucial pivot that paves the way for China to rejoin the rest of the world in living with the virus.
The fear of Covid by large parts of the Chinese public is mostly of the government's own making, as state propaganda has painted the disease as fearsome and the West's acceptance of it - and the millions of deaths in the US and Europe - as a moral failing. But as other countries have moved past the pandemic, more and more people have questioned why China is living in an alternate reality, raising pressure on the authorities.
China's adherence to Covid Zero has hit business activity, pushing down consumer and business confidence as people are stuck in a cycle of outbreaks and lockdowns. The cost of ubiquitous PCR testing has worsened the financial health of local governments, while tragic incidents blamed on Covid controls, like a fire in Xinjiang which killed 10 people, have intensified public anger.
Social unrest erupted across major cities in recent weeks, ranging from hundreds on the streets shouting for President Xi Jinping to step down, to small shows of defiance as neighbors banded together to stop their housing compounds from being locked down.
--With assistance from Neha D'silva and Tian Chen.
(Updates with market moves in fifth paragraph.)
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