China’s decision to announce a significant easing of Covid-19 restrictions will cheer multinationals. The decision to cut quarantine times for inbound travel by half will come as a relief to residents and business groups. Just don’t take this change as a sign that China is close to returning to normal.
Companies that trumpet confidence in a quick rebound for the world’s largest consumer market are being overly optimistic. China’s determination to stick to its zero-Covid policy means mass testing, quarantines and lockdown measures will continue. Earlier this month, multiple neighbourhoods in Shanghai were placed under lockdown just one day after city-wide restrictions were lifted.
Downbeat earnings guidance issued by sportswear giant Nike is likely to be replicated by more consumer companies in the weeks to come.