China To Open Borders, Drop COVID-19 Restrictions: What You Need To Know

China will strike the final blow to its COVID-19 restrictions at the beginning of next year, for both citizens of the country and those traveling to the mainland.

What Happened: China will reopen borders and abandon quarantine after it downgrades its treatment of COVID on Jan. 8. 

The decision is the mainland’s last step in shedding three years of zero-COVID and pivoting to living with the virus.

Since 2020, COVID has been treated in China as a category A infectious disease, in line with cholera and the bubonic plague.

According to Chinese law, in order to contain contagious diseases in category A, authorities enact the strictest regulations, such as quarantining and isolating the infected and their close connections as well as citywide lockdowns.

Provincial health officials and hospitals in China said the National Health Commission contacted them on Sunday and asked them to get ready for the relegation to category B management starting on Jan. 8, according to South China Morning Post. 

That category means COVID only requires “necessary treatment and measures to curb the spread.”

Why It Matters: Mainland China's abrupt and quick lifting of its COVID-related limitations has exposed a new set of economic difficulties.

The relaxation of limitations has led to an increase in uncontrollable COVID cases in China, which has resulted in a lack of both staff across industries and medications.

Read also: China COVID-19 Surge Leads To Crowded Hospitals, Empty Streets

Stocks To Watch: The reopening of China's economy will have an effect on equities focused in certain companies with operations there as well as businesses that would suffer from any indirect effects of instability in the second-largest economy in the world after it abandons its COVID restrictions.

Shares of Estee Lauder Companies Inc EL, Starbucks Corporation SBUX and Wynn Resorts, Limited WYNN could move, as these companies have sizable presences in China.

Chinese ETFs including Global X MSCI China Real Estate ETF CHIR, KraneShares CSI China Internet ETF KWEB, KraneShares Hang Seng TECH Index ETF KTEC, and Invesco Golden Dragon China ETF PGJ are worth keeping an eye on as well, as those ETFs have made notable moves over the last few weeks.

Read next: One Million People Could Die From COVID-19 In China Next Year: Report

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