China is set to announce a further easing of some of the world's toughest Covid-19 curbs as early as Wednesday, sources said, as investors cheered the prospect of a policy shift that follows widespread protests and mounting economic damage.

Three years into the pandemic, China's zero-tolerance measures, from shut borders to frequent lockdowns, contrast sharply with the rest of the world, which has largely decided to live with the virus.

The strict approach has battered the world's second-largest economy, put mental strain on hundreds of millions and last month prompted the biggest show of public discontent in mainland China since President Xi Jinping took power in 2012.

Although last month's protests largely subsided amid a heavy police presence across major cities, regional authorities have since cut back on lockdowns, quarantine rules and testing requirements to varying degrees. Top officials have also softened their tone on the dangers posed by the virus.

The financial hub of Shanghai announced that it would remove Covid-19 testing requirements for people to enter most public places from tomorrow.

A new set of nationwide rules is due to be announced soon, two sources with knowledge of the matter told Reuters, paving the way for more coordinated easing.

Beijing is also weighing whether to scale down its management of the virus to reflect the less serious threat it poses as early as January, the sources added.

More broadly, analysts now predict China may drop border controls and re-open the economy sooner than expected next year, with some seeing it fully open in spring.

In another hopeful sign for business, a source at Apples supplier Foxconn told Reuters the firm expected its Covid-hit Zhengzhou plant, the world's biggest iPhone factory, to resume full production later this month or early the next.

As infections rise, putting pressure on China's medical infrastructure, mild and asymptomatic cases should quarantine at home, Feng Zijian, former deputy head of the Chinese Centre for Disease Control and Prevention, told The Paper.

Those who have not completed their basic immunisation or obtained their booster shots should do so as soon as possible, especially the elderly and vulnerable, Feng told the Shanghai government-backed news outlet in an interview.

"Though we are hopeful too, we caution that the road to reopening may be gradual, painful and bumpy," wrote Nomura chief China economist Ting Lu in a research note, adding that China did not appear to be well prepared for a massive wave of infections.

The yuan jumped to its strongest level against the dollar since mid-September amid a broad market rally as investors hope the unwinding of pandemic curbs will brighten the outlook for global growth.

Economic data underscored the damage done by the curbs, as services activity shrank to six-month lows in November.

Disease 'weakening'

Alongside the easing of local curbs, Vice Premier Sun Chunlan, who oversees Covid-19 efforts, said last week the ability of the virus to cause disease was weakening.

That change in messaging aligns with the position held by many health officials around the world for more than a year.

Morning commuters at a subway station in Shanghai

As the virus weakens, conditions are improving for China to scale back management of Covid-19 as a serious contagious disease, state media outlet Yicai said yesterday, in comments that are among the first to float the idea.

Authorities in the southwestern municipality of Chongqing urged local bodies not to test too much. "Do not repeat testing or increase testing," they said.

The eastern province of Zhejiang said it planned to largely end mass testing, while Nanjing dropped Covid-19 tests for use of public transport.

So has the capital Beijing, though entry to many office buildings in the capital still requires negative tests, leaving workers confused.

The government of the city of Shanghai is set to remove the Covid-19 testing requirement to enter most public places from tomorrow.

The scrapping of the requirement for negative tests to buy medicines for cold and fever in various cities, intended to deter people from using the drugs to disguise symptoms, has led instead to mass buying, some state media said.

Daily tallies of new Covid-19 infections have also dropped in some regions as authorities row back on testing.

Earlier, Australian Prime Minister Anthony Albanese has tested positive for Covid-19 for the second time.

He said he will work from home while isolating, but is due to make a two-day trip to Papua New Guinea next week.

"I encourage anyone who is unwell to test and to take any extra precautions to keep their families and neighbours well," Mr Albanese said in a statement.

In October, Australia ended mandatory home quarantine for Covid-infected people.

The last time that Mr Albanese was during his election campaign.

It comes as Pfizer Inc and its German partner BioNTech SE said they have submitted an application to the US Food and Drug Administration (FDA) for emergency use authorisation of their Omicron-adapted Covid-19 booster vaccine for children aged six months through to four years.

If authorised, children would receive the primary series consisting of two doses of the original Pfizer-BioNTech vaccine and one shot of the Omicron-adapted bivalent vaccine, the company said.

The bivalent COVID-19 vaccine, which targets the original strain and the BA.4/BA.5 Omicron subvariants, is currently authorised as a booster dose for ages five years and older in the US and the EU.

Last month, a real-world study of more than 360,000 people in the US found the updated bivalent boosters, including those of rival Moderna Inc, offered increased protection against new coronavirus subvariants in people who have received up to four doses of the older vaccine.