As China continues to grapple with subdued economic activity, analysts warn that the outlook for the coming months remains murky and potentially even more problematic as a loosening of coronavirus controls has led to a resurgence of infections. China is currently seeing a mixed bag of local coronavirus responses, as relaxed controls are prevailing across major metropolises while restrictions are tightening in other regions. Even with China seeing around 30,000 daily infections , major cities such as Beijing, Guangzhou , Tianjin and Chengdu have relaxed restrictions and no longer require a negative coronavirus test result to board public transport. Several local governments said testing should be conducted only on people at risk. And in some cities, close contacts and those who test positive are no longer required to go to centralised facilities. The policy easing has lifted market sentiment, as seen in the strong equity market rebound as well as bullish yuan upticks. The market rally came as the reopening process has become much more certain than before, and the policies are increasingly unlikely to reverse and go back to lockdowns again, said Zhang Zhiwei, chief economist at Pinpoint Asset Management. On the other hand, the easing of restrictions has not been accompanied by a swift economic rebound. A Goldman Sachs report on Monday showed that nearly 200 cities have high-risk districts, covering 75 per cent of China’s gross domestic product. Mobility metrics such as subway ridership and domestic flights also dropped in the last week of November, signalling a more prominent on-the-ground impact from surging coronavirus cases. According to State Council data on Sunday, the number of cargo trucks on highways was down by nearly 10 per cent compared with Saturday, while the number of cargo flights decreased by close to 20 per cent compared with a day earlier. Air traffic in China last week dropped to just 20 per cent of what was seen during the same period in 2019, according to Chinese aviation data provider Flight Master. Lots of people will get sick, which could result in factory closures or facilities being unable to run at full capacity Zhang Zhiwei, Pinpoint Asset Management China’s services activity also shrank to a six-month low in November as a mix of surging new cases and tightening restrictions in some regions weighed on demand and operations, the Caixin/S&P Global services purchasing managers’ index (PMI) showed on Monday. The private-sector business survey index fell to 46.7 from 48.4, marking the third monthly contraction in a row while echoing the weak data in a larger official survey last week that showed services activity had fallen to a seven-month low. The official manufacturing PMI also fell to 48 in November , down from 49.2 in October and marking the lowest reading since hitting 47.4 in April . In the next three months or so, China will see more mixed economic indicators, Zhang said. “Some aspects will suffer from negative impacts, such as production and supply chains – lots of people will get sick, which could result in factory closures or facilities being unable to run at full capacity,” Zhang added. Home isolation ‘inevitable’ if cases surge, China Covid advisor says “In the meantime, mobility and consumption could improve a little bit in places such as Guangzhou, and a more broad-based and pronounced rebound will happen probably in the second half of next year when China fully gets back to normal life,” he said. “The next three months will be similar to [Hong Kong’s situation] in March and April when big outbreaks happened. “Despite reopening, many people will choose to be relatively careful or stay at home for precautionary reasons, so an economic recovery won’t happen swiftly, and some figures could get worse.” Given the heightened uncertainty associated with China’s reopening path, the risk of an earlier but managed exit has increased, Goldman Sachs said in its report. “With policy tone decisively changing on both Covid and property in November, the upcoming December Politburo meeting , which provides high-level guidelines for economic policymaking for next year, is key to watch,” the report said.