Hong Kong jan2019
Quarantine-free travel with the mainland may start as soon as next month for the first time in almost three years. Image Credit: File photo

Hong Kong is scrapping some of its remaining COVID restrictions following China's rapid shift away from the zero-tolerance approach.

The government will lift a ban on international arrivals going to bars or eating at restaurants, and stop requiring people to scan a QR code on their phones to enter venues, Chief Executive John Lee said at a press conference Tuesday. Some venues will still need proof of vaccination upon entry, he said, without mentioning whether the government intends to remove the mask mandate.

"All people want to have less restrictions as much as possible, while ensuring activities socially and economically can proceed as much as possible," Lee said.

Analysts welcomed the easing, saying the moves would help boost inbound tourism, although they said the bigger impact will come from the mainland reopening.

"This swift adjustment is very positive for economic sentiment," said Michelle Lam, Greater China economist at Societe Generale SA. "As for the economy, the real shift will happen when China reopens with the rest of the world, which could be happening soon."

The city will likely be one of the biggest beneficiaries of China's moves to exit Covid Zero and reopen its economy, Goldman Sachs Group Inc. economists said earlier this week. They estimated Hong Kong would get a 7.6% boost to GDP as exports and tourism income climb.

Expectations for Hong Kong to drop its remaining COVID restrictions had been growing after the central government did a rapid U-turn on Covid Zero in recent weeks. Quarantine-free travel with the mainland may start as soon as next month for the first time in almost three years, local media reported.

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Stocks in the city extended gains after the announcement, with the MSCI Hong Kong Index climbing as much as 1.5%. Mall operators surged, led by Wharf Real Estate Investment Co. and Jardine Matheson Holdings Ltd. Cathay Pacific Airways Ltd. jumped as much as 5.2%.

"This is for sure good news for Hong Kong economy as this could boost inbound tourism," said DBS Bank Ltd. economist Samuel Tse. "A fundamental reversal would hinge crucially on the reopen of border with mainland China. After all, almost 80% of visitors to Hong Kong were mainland Chinese tourists."

The city hosted about 250,000 arrivals in the first nine months of this year, compared with more than 46 million in the same period in 2018."

On the border, Lee said reopening will depend on how COVID develops in the mainland.

"Of course our goal is to resume normal travel as soon as possible, but we need to move this forward based on the actual situation," Lee said. "As we all know, there are a series of things the mainland needs to consider, including the Covid situation, the number of confirmed cases and other related facilities."

Hong Kong's health minister will hold a press briefing later Tuesday, where more details will be released, Lee said.

The moves came after Lee said on Sunday the government will conduct a full review of the city's COVID measures, including the city's Leavehomesafe app. Last week, Hong Kong said it would shorten the isolation period for people who test positive for CCOVID vid and their close contacts, and require two fewer rapid tests for inbound travelers.