It has been a while coming but it took public protests unlike any other to have really gotten China moving (with pace) on this issue. I mentioned at the time back in October that:
"But with the sacrifices to the economy and the uprising of the people, even the most powerful of politicians can only endure so much. The unrest caused by the government's policies is something that we have never really seen before in China and that says a lot about the times. Considering how Xi is trying to put China on the path to "common prosperity", this is arguably not how he would have envisioned things to play out. The zero-Covid policy is something that he has stuck his neck out on but now perhaps Xi is realising that he needs to adjust to the change in the times as well."
Things have certainly went from zero to a hundred in a matter of days for China and suddenly, we're greeting the end of its zero-Covid policy.
The next step will be the re-opening of travel routes internationally or at least the easing of restrictions on that part.
But the bigger question for markets will be what happens next when the dust settles on this whole re-opening optimism?
How does this impact global demand conditions and in particular, how does this feed into the inflation story? A positive surely will be that supply issues will arguably not get worse any more, even though they have already significantly improved since the start of the year. But the impact on inflation is the most important one to watch as we look towards next year's set of narratives.
