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China announced on Wednesday the most sweeping changes to its tough anti-COVID regime since the pandemic began three years ago, loosening rules that curbed the spread of the virus but had hobbled the world's second largest economy and sparked protests.

The relaxation of rules, which include allowing infected people with mild or no symptoms to quarantine at home and dropping testing for people travelling within the country, are the strongest sign yet that Beijing is preparing its people to live with the disease.

Many of the changes announced by the National Health Commission (NHC) reflected steps already taken in various cities and regions in recent days, following protests against COVID controls that were the biggest demonstration of public discontent since President Xi Jinping came to power in 2012.

Even still, citizens cheered the prospect of a shift that could see China slowly emerging back into a world three years after the virus erupted in the central city of Wuhan in late 2019.

Wednesday's announcement quickly soared to the top most viewed topic on China's Weibo platform, with many people hoping for a return to normality after a series of weeks-long lockdowns that have brought mental suffering to tens of millions.

"It's time for our lives to return to normal, and for China to return to the world," wrote one Weibo user.

Some investors also welcomed the shift that could reinvigorate China's sagging economy and currency and bolster global growth.

"This change of policy is a big step forward," said Zhiwei Zhang, chief economist at Pinpoint Asset Management. "I expect China will fully reopen its border no later than mid 2023."

Foreign businesses in China also hope the changes could mark a shift to broader opening up and an easing of travel restrictions.

"We need the business environment here to return to a level of predictability whereby companies can return to normal operations," Colm Rafferty, chairman of the American Chamber of Commerce in China, said in a statement.

But NHC spokesperson Mi Feng told a news conference that any changes to measures regarding travel would be "gradual".

PROTESTS AND FEAR

The policy change came after President Xi Jinping, who regards China's relentless fight against COVID as one of his main achievements, chaired a meeting of the Communist Party's Politburo on Tuesday.

Some analysts seized on a report on the meeting by official news agency Xinhua that lacked any mention of the "dynamic zero-COVID" policy, though it was unclear whether this was a signal of a fundamental change in stance.

Major cities across China, including Beijing and Shanghai, were gripped by protests last month, which started to peter out amid a heavy police presence and various restrictions being lifted in different parts of the country.

Officials have not linked any of the changes, made on Wednesday or earlier, to the protests.

But they have been softening their tone on the health risks of the virus - bringing China closer to what other countries have been saying for more than a year as they dropped restrictions, and shifted towards living with the virus.

The looser approach has set off a rush for cough and fever medicines as some residents, particularly the unvaccinated elderly, feel more vulnerable to a virus that has largely been kept in check by Beijing's strict policy.

China's current tally of 5,235 COVID-related deaths is a tiny fraction of its population of 1.4 billion, and extremely low by global standards.

"Please buy rationally, buy on demand, and do not blindly stock up," the Beijing Municipal Food and Drug Administration was quoted as saying in the state-owned Beijing Evening News.

In Beijing's upmarket Chaoyang district, home to most foreign embassies as well entertainment venues and corporate headquarters, shops were fast running out of some those drugs, residents said.

The surge in demand drove up share prices in medicine manufacturers including cough syrup producer Guizhou Bailing (002424.SZ), and Xinhua Pharmaceutical (000756.SZ), which makes 40% of all Ibuprofen sold in China.

China's yuan has seen a recent resurgence against the dollar, buoyed by the prospects that government would relax its "zero-COVID" policy.

But the currency remains set for its worst year since China unified official and market exchange rates in 1994, as its economy has been battered by COVID curbs.

In further evidence of that, China's exports and imports shrank at a much steeper-than-expected pace in November, data on Wednesday showed. (Reuters)