People in China celebrated the withdrawal on Tuesday of a state-mandated app used to track whether they had travelled to COVID-stricken areas, in the latest loosening of some of the world’s toughest anti-virus rules.

As authorities deactivated the ‘itinerary code’ app at midnight on Monday, China’s four telecoms firms said they would delete users’ data associated with the app.

“Goodbye itinerary code, I hope to never see you again,” said a post on social media platform Weibo, where netizens cheered the demise of an app that critics feared could be used for mass surveillance.

“The hand that stretched out to exert power during the epidemic should now be pulled back,” wrote another user.

For all the relief over the decision last week to begin dismantling key parts of the government’s stringent ‘zero-COVID’ policy, there are fears that China could now pay a price for having possibly protected its 1.4 billion people too well against the virus.

The potential for a surge of infections during the Chinese New Year holiday next month, when people travel across the country to be with their families, remains a danger for a population that lacks “herd immunity” and has relatively low vaccination rates among the elderly, according to some analysts.

Itinerary codes were mainly used to track domestic travel within China, while authorities also use so-called health codes that residents must scan to enter public venues in order to check whether they may have been in contact with the virus.

The moves made last week to unwind the COVID curbs included dropping mandatory testing prior to many public activities and reining in quarantine.

Long queues outside fever clinics were a worrying sign that a wave of infections is building, even though official tallies of new cases have trended lower in recent weeks as authorities rowed back testing.

While China has not announced that the health codes will be scrapped, several cities including Shanghai have said that residents are no longer required to show these codes when entering places such as shops and restaurants.

The loosening of controls has come hard on the heels of historic protests against President Xi Jinping’s signature ‘zero-COVID’ policy.

The demonstrations, which ranged from candle-lit vigils in Beijing to street clashes between angry residents and riot police in Guangzhou, were the biggest show of public discontent in mainland China since Xi came to power in 2012.

Beijing’s envoy to the United States on Monday said he believes China’s COVID-19 measures will be further relaxed in the near future and international travel to the country will also become easier.

China has all but shut its borders to international travel since the pandemic first erupted in the central Chinese city of Wuhan in later 2019. International flights are still at a fraction of pre-pandemic levels and arrivals face eight days in quarantine.

Financial hub Hong Kong, which already has less stringent border controls than mainland China, on Tuesday said it would drop a requirement for incoming travellers to avoid bars and restaurants in the first three days after their arrival.

Hong Kong will also scrap its mobility-tracking app governing access to restaurants and venues such as gyms, clubs and salons, Chief Executive John Lee said on Tuesday.

While the lifting of controls is seen as brightening the prospects for global growth longer term, analysts say Chinese businesses will struggle in the weeks ahead, as a wave of infections create staff shortages and make consumers wary.

Analysts say the decline in reported new cases could reflect the dropping of testing requirements rather than the actual situation on the ground.

“The rapid surge of infections in big cities might be only the beginning of a massive wave of COVID infections,” said Ting Lu, Chief China Economist at Nomura.

“We reckon that the incoming migration around the Chinese New Year holiday in late January could bring about an unprecedented spread of COVID.”

Experts say China’s fragile healthcare system could be quickly overwhelmed if those fears are realised.

In China’s capital Beijing, empty seats on commuter trains and deserted downtown restaurants have underlined the hesitancy some people harbour about embracing new found freedoms.

“I can understand,” Gao Lin, a 33-year-old financier, told Reuters on the streets on the capital. “Maybe other people are afraid or are worried about kids and grandparents health conditions. It’s a personal choice.”

China stocks (.CSI300) edged lower on Tuesday as a recent rebound triggered by reopening hopes lost steam amid concerns of a spike in COVID infections.

China’s yuan, which is down almost 9% against the dollar this year and heading for its worst year since 1994, when China unified the official and market exchange rates, was little changed on Tuesday.

Related Galleries:

Plucky bitcoin’s been holding steady since seeing off the chaos of the FTX collapse, gathering its strength to rally towards the dizzy heights of $30,000 in 2023.

Battered bitcoin’s been unresponsive since being clobbered by the FTX collapse, taking in a deep ragged breath before plunging towards the depths of $5,000.

Place your bets, spin the wheel.

The world’s dominant cryptocurrency has certainly been uncharacteristically muted over the past two weeks, treading water between about $15,770 and $17,350 in the eerie wake of the FTX-induced market mini-crash in November.

What happens next is anyone’s guess.

“The question we need to be asking ourselves now is: Are there any sellers left in this market? To my mind, no, there aren’t that many left,” said Jacob Sansbury, co-founder of retail investor services firm Pluto.

Sansbury believes most over-leveraged miners, who tend to be large holders of bitcoin, have exited positions to pay off debts taken out in traditional money to fund their equipment and operations.

Indeed bitcoin’s recent calmness could be down to the fact that there are fewer coins to sell: the amount held on exchanges for trading stands at 1.97 million, Coinglass data shows, down steeply from 2.33 million at the start of the year.

Major offloading has already taken place; November saw a 7-day realized loss of $10.16 billion in bitcoin investments as investors were forced to exit long-term positions, the fourth-largest loss on record by this measure, according to Glassnode data.

The cryptocurrency has already dropped more than 60% in 2022 and set to see its first annual loss since 2018.

Many remaining investors are placing their bitcoin into offline “cold storage” according to on-chain data, which should strengthen a floor price around $16,000, said Bob Ras, co-founder of Sologenic, an exchange and digital asset firm.

“Barring any more surprises in the market, it’s hard to imagine BTC going significantly lower,” he added.

Ras believes that if it wasn’t for the high-profile collapse of crypto players FTX, Celsius and Terra this year, the price of bitcoin would be close to $25,000 now.

But this is crypto, and more surprises could well be in store, with a number of potential selling triggers on the horizon.

First potential peril is the risk of more bitcoin miners being forced to sell their holdings to stay afloat, as mining becomes increasingly expensive.

“Miners as a group start to become unprofitable under $20,000, so we’re below (that) point,” noted Ben McMillan, chief investment officer at IDX Digital Assets.

CrytpoQuant’s miner reserve indicator, which tracks the amount of bitcoin held in miners’ wallets, has dropped by about 7,722 bitcoin since November.

Market players also pointed to concerns about the Grayscale Bitcoin Trust, (GBTC.PK) the world’s largest bitcoin fund with $10.9 billion in assets. Parent company Digital Currency Group, which owns Genesis Trading, owes $575 million to Genesis’ crypto lending arm, DCG’s CEO told shareholders on Nov. 22.

Grayscale Bitcoin Trust’s discount to its net asset value, is at an all-time low of 48% and shares have not traded at a premium since March 2021, Coinglass data showed.

DCG last month said troubles at Genesis’ lending business had no impact on DCG and its subsidiaries, while Grayscale maintained it was business as usual and its underlying assets were unaffected.

“This could be the other shoe to drop,” said McMillan, referring to the possibility of Grayscale running into financial trouble. “That said, if bitcoin can hold the $15,000 line through the DCG workout, that would be a strong indicator going into 2023.

A more hawkish than expected Federal Reserve at its final meeting of the year on Wednesday could further erode risk appetite and bitcoin’s prospects, crypto watchers said.

The scenarios of bitcoin leaping to $30,000 or tumbling to $5,000 in 2023 were long-shot possibilities flagged by VanEck and Standard Chartered, respectively.

When it comes to the technicals, several analysts pointed to indicators showing bitcoin may have found support between $16,000 and $16,800.

The cryptocurrency could also run into resistance around the $17,490 level, said Eddie Tofpik, head of technical analysis at ADM Investor Services, cautioning that any long-term rally was likely to be challenging.

“Anytime we see a rally, it’s one step up and then two or three steps down,” he said.

Vetle Lunde, analyst at Arcane Research, said long-term bets could be appealing in the wake of the November turmoil.

Nonetheless, uncertainty reigns.

“Bear in mind that massive drawdowns tend to be followed by a long-lasting directionless market filled with apathy and unfathomable second-guessing,” Lunde added.

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Alabama and Utah on Monday joined other U.S. states prohibiting the use of Chinese-owned short-video sharing app TikTok on state government devices and computer networks due to national security concerns.

The actions follow warnings from FBI Director Chris Wray last month who said the Chinese government could use the ByteDance-owned app to control data collection on millions of U.S. users or control the recommendation algorithm, which could be used for influence operations.

“Disturbingly, TikTok harvests vast amounts of data, much of which has no legitimate connection to the app’s supposed purpose of video sharing. Use of TikTok involving state IT infrastructure thus creates an unacceptable vulnerability to Chinese infiltration operations,” Alabama Governor Kay Ivey said in a statement.

Her directive also orders executive branch agencies to take all necessary steps to prevent TikTok from accessing sensitive state data.

“We’re disappointed that so many states are jumping on the bandwagon to enact policies based on unfounded, politically charged falsehoods about TikTok,” a TikTok spokesperson said in a statement.

Federal Communications Commissioner Brendan Carr said in a tweet on Monday that at least nine states have taken action on TikTok “based on the serious security threats it presents”.

Other U.S. states that have banned TikTok on state devices include Texas, Maryland and South Dakota.

Indiana has also sued the app, alleging that it is deceiving users about China’s access to their data and is exposing children to mature content.

Former President Donald Trump in 2020 attempted to block new U.S users from downloading WeChat and TikTok, which would have effectively blocked the use of these apps in the United States, but lost a series of court battles.

In June 2021, President Joe Biden withdrew Trump’s executive orders that sought to ban the downloads and directed the Commerce Department to conduct a review of security concerns posed by the apps.

German automakers and Asian battery suppliers are getting together in Hungary in a multi-billion-dollar marriage of convenience to drive their electric ambitions.

The companies are flocking to central Europe, where Viktor Orban’s government is defying Western wariness of China and offering generous benefits to host foreign operations and stake Hungary’s claim as a global centre for electric vehicles (EVs).

Investment in the Hungarian auto industry is being dominated by three countries – Germany, a champion carmaker, plus China and South Korea, EV battery leaders way ahead of European rivals.

Companies from those three countries have accounted for 29 out of the 31 cash subsidies handed out by Hungary for major investments in its auto and battery sector over the past decade, according to a Reuters analysis of government data that shows the scale of German, Chinese and Korean convergence there.

“Cathodes, anodes, separators, assembly lines, the full battery supply chain is here,” said Dirk Woelfer of the German-Hungarian Chamber of Commerce in Budapest. “This is a foot in the door to Europe.”

Recipients of such subsidies included the likes of German automakers BMW (BMWG.DE) and Mercedes-Benz (MBGn.DE), and battery makers such as China’s BYD and Korean rival Samsung SDI (006400.KS). The median subsidy level has been 15% of investment.

In total, Hungary has received over 14 billion euros ($15 billion) in foreign direct investment into its battery sector alone in the past six years, according to government figures.

Major investments are broadly classed as those worth over 5-10 million euros, varying with factors such as jobs created.

State incentives and the opportunity for automakers and battery suppliers to work next door to each other is proving a strong pull, according to interviews with about 20 industry players and consultants in Germany, Hungary, China and South Korea.

China’s CATL (300750.SZ), the world’s No. 1 EV battery maker, and Korean battery giants SK Innovation (096770.KS) and Samsung SDI, all told Reuters that the planned proximity to German carmakers was a key factor in their decisions to invest in Hungary, as well as being able to source separators and other components there.

CATL is investing $7.6 billion to build Europe’s largest battery plant in Hungary. This plant and the $2.1 billion BMW factory will both be sited in the city of Debrecen, which is attracting an ecosystem of suppliers, ranging from makers of brakes and battery cathodes to industrial machinery.

Mercedes-Benz is converting its factory in Kecskemet to produce electric cars, while Volkswagen’s (VOWG_p.DE) Audi is making cars and electric motors in Gyor.

Such big business could present a boon for Prime Minister Orban’s government as the country faces its toughest economic environment in more than a decade, with inflation running above 20%, the economy slowing and EU funds in limbo.

Yet the Hungarian EVs project also faces stiff obstacles, according to many of the industry insiders.

One key concern is the huge demands that massive battery plants will place on the electricity grid, which needs to shift away from fossil fuels towards renewables to meet the net-zero emissions targets of much of the auto industry, the people said.

A lack of specialised workers in Hungary to work in battery cell manufacturing could also drag on capacity, they added.

HIPA, the Hungarian Foreign Ministry agency responsible for attracting investments in areas ranging from batteries and cars to logistics, did not respond to Reuters queries about the EV industry.

Hungary’s welcome to Asian battery makers might jar with concerns expressed by Brussels and Berlin about the perils of Europe becoming too dependent on China and other foreign powers, particularly in technologies central to the green transition.

Still, for now, the need to ramp up EV output leaves the European auto industry little choice but to source from Asian players, said Csaba Kilian of Hungary’s automotive association.

“I absolutely agree that European manufacturers should have their own sources … but it’s a competition, and China has made good steps,” he added. “There is a learning curve.”

Europe should have a EV battery manufacturing capacity of 1,200 gigawatt hours (GWh) by 2031 if current plans come to fruition, outstripping expected demand of 875 GWh, Benchmark Mineral Intelligence (BMI) estimates. But of that 1,200 GWh, 44% will be provided by Asian companies with factories in Europe, ahead of homegrown firms on 43% and U.S. pioneer Tesla (TSLA.O) with 13%, according to a Reuters calculation based on BMI data.

The prospects for developing a battery sector in Germany have been set back by record energy there as a result of the loss of Russian gas, according to autos consultants at Boston Consulting Group and Berylls Strategy Advisors.

Hungary offers a comparatively stable energy system bolstered by nuclear energy, as well as high subsidies and Europe’s lowest corporate tax rate of 9%.

The entire battery supply chain has come to the country, said Ilka von Dalwigk, policy manager at the European Battery Alliance, launched by the European Union in 2017 to kick-start a homegrown industry.

“Everything is located there. When we look at the forecast for 2025 and 2030, it looks like it will have one of the largest production capacities in Europe,” she added.

“It might very well be that Hungary is in fact the next big battery production cluster in Europe.”

Asked about concerns about reliance on Asia for technology, an EU official said the bloc – which must approve member state subsidies to investors – had a system in place to cooperate and exchange information on investments from non-EU countries that may affect security.

The European Commission is currently in talks with Hungary over the size of the subsidy the country will offer to CATL for building the Debrecen plant, the official added.

For some Western companies, setting up shop in Hungary is a tough decision.

German autos supplier Schaeffler said it was on the verge of setting up its primary electric motor plant in Hungary rather than Germany in August because of the appeal of Hungary’s incentives, but decided on Germany for fear of sending “the wrong signal” to Germans who fear a loss of jobs to overseas.

Other industry players expressed a range of concerns over potential pitfalls for the burgeoning Hungarian auto industry as factories ramped up, including the power grid issue.

Batteries, in particular, are highly energy-intensive parts of EVs to produce, requiring high amounts of power for the drying the materials and machine operation.

Hungary’s sources of energy in 2021 comprised 80% fossil fuels, 14.5% nuclear and 3.6% solar, according to a Reuters calculation of data from the BP Statistical Review of World Energy.

The mix spells trouble for carmakers who will soon need to showcase carbon-free credentials across their supply chains under new German and European legislation.

Hungarian Foreign Minister Peter Szijjarto met senior executives from BMW and auto suppliers including Schaeffler and Knorr-Bremse in Munich last month, ahead of the German carmaker announcing it was beefing up its investment in the country.

Topics discussed included plans to improve logistics infrastructure in Hungary and increasing the amount of renewables energy used for the power grid, according to one of the companies that attended.

When BMW first announced its plan to build its Debrecen plant, in 2018, the government committed to spending around 135 billion forints on improving local infrastructure, according to calculations by the German-Hungarian Chamber of Commerce.

On the battery side, CATL told Reuters it was considering developing solar power with local partners in Hungary.

Despite the risks, Alexander Timmer, a partner at Munich-based consultants Berylls Strategy Advisors who has worked on several autos and battery projects in Hungary, said the country presented an appealing package.

“The combination of cost advantages, state subsidies, and closeness to automakers’ plants makes Hungary increasingly attractive to battery producers, he added.

($1 = 397.54 forints; $1 = 0.9483 euros)

Ukraine’s allies will meet in Paris on Tuesday to provide urgent aid to help the country get through freezing winter temperatures as Russian forces target civilian infrastructure across the country.

About 70 countries and institutions will discuss what can be offered between now and March to maintain water, food, energy, health and transport.

A second meeting between France, Ukraine and some 500 companies will see what can be invested and done in the short to long-term.

“Since October, we have had Russia trying to compensate for the difficulties it is experiencing on the front with a series of intensive bombings which is targeting not the military infrastructure, but very clearly the civilian infrastructure of Ukraine,” a French diplomat told reporters in a briefing ahead of the meeting.

“This situation puts Ukraine in great difficulty when winter is already here,” he said.

He added that the immediate priority was to ensure the electricity network did not collapse and that water pipes did not freeze.

“The reality is that our objective will be to find replacement pieces to ensure the infrastructure that has been destroyed by the Russians works again,” he said.

The international meeting will look to create an online mechanism so that Ukraine can put down its urgent needs and donor countries can respond in accordance, the diplomat said.

Ukraine President Volodymyr Zelenskiy will address the meeting by video link and his wife, Olena Zelenska, will attend in person.

The conference comes amid criticism of French President Emmanuel Macron from some European allies and Ukraine itself about French policy on Ukraine and whether it is a weak link in the Western alliance that has been bolstering Kyiv against Russia’s invasion.

Macron’s mixed messages on Ukraine have caused exasperation that has become increasingly public in some east European capitals. The French presidency has dismissed this saying his comments, notably on providing security guarantees for Russia, are taken out of context and Paris has never wavered in its support for Kyiv.

Asian stock markets slipped after making early gains on Tuesday, as investors waited for U.S. inflation data that many hope will persuade the Federal Reserve and other central banks to step back from aggressive interest rate hikes.

MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) was up 0.10% in midday trade while Japan’s Nikkei (.N225) and Australian shares were 0.35% and 0.24% higher respectively. Seoul’s KOSPI index was down 0.10%.

China’s CSI300 Index (.CSI300) and the Shanghai Composite Index (.SSEC) fell 0.33% and 0.21% respectively as a fears of a surge in COVID-19 infections following the dismantling of key parts of government’s zero-COVID policy clouded the outlook for the world’s second biggest economy.

But a tourism-linked index (.CSI930633) jumped more than 2% as Hong Kong eased COVID-19 restrictions for inbound travellers.

Beyond China, investors’ main focus was on U.S. inflation data due out at 1330 GMT on Tuesday, with core CPI inflation expected to slow from 6.3% to 6.1% and headline inflation dropping to 7.3%.

Treasury Secretary Janet Yellen struck a cautious note on Sunday in saying she expected a substantial slowdown in 2023 inflation, but that the U.S. economy remained prone to shocks.

Later this week, the Fed, European Central Bank and the Bank of England are all expected to raise rates by 50 basis points (bps), rather than the aggressive 75 bps hikes they went with earlier in the year.

“Given the very close proximity (of U.S. CPI data) to the FOMC, it clearly has the ability to change the tone of the message … but is highly unlikely to change the headline 50 bps hike,” Deutsche Bank said in a research note.

The dollar index , which measures the greenback’s value against six major currencies, was flat at 105.01.

Oil prices rose further after jumping on Monday due to supply jitters, with Brent crude futures up 1.17% at $78.90 a barrel and U.S. West Texas Intermediate crude up 1.15% at $73.99 a barrel.

Spot gold hovered around $1,781.50 per ounce, while U.S. gold futures were up 0.01% at $1,792.5.

By Lucas Fox, Este Griffith, Tara Petronio

In 2022, The Hamilton Project continued its mission of advancing inclusive economic growth by conducting original research on policy-relevant issues, commissioning policy proposals from leading economic experts, and hosting events that brought together policymakers, academics, and businesspeople. This year, Hamilton Project research evaluated the economic policy response to the pandemic and its effects on inflation, labor market conditions in both the goods and service sectors, social insurance programs including the Child Tax Credit, and more. This review highlights 12 key data visualizations produced by The Hamilton Project that capture the spirit of its work in 2022.

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