The surge in the number of infections, at record highs not seen since an outbreak in Shanghai earlier this year, is diminishing investors' hopes that China will soon ease the rigid zero-COVID policy that, along with a downturn in the property market, is battering the economy.

The restrictions have also extracted a toll on China's increasingly frustrated residents, as well as output at factories including the world's biggest iPhone plant, which has been rocked by violent clashes between workers and security personnel in a rare show of dissent.

"We believe reopening is still likely to be a prolonged process with high costs," Nomura analysts wrote in a note. The brokerage cut its GDP forecast for the fourth quarter to 2.4 percent year on year from 2.8 percent, and also cut its forecast for full-year growth to 2.8 percent from 2.9 percent.

China's leadership has stuck by its zero-COVID policy, which includes some of the strictest restrictions in the world, saying it is necessary to save lives and prevent the medical system from being overwhelmed.

However, in an acknowledgement of the pressure on the economy, the cabinet said China would use timely cuts in bank cash reserves and use other monetary policy tools to make sure there was enough liquidity, state media reported on Wednesday, a hint that a cut in the reserve requirement ratio (RRR) may be coming soon.

China recorded 31,444 new local COVID-19 cases for Wednesday, breaking the record set on April 13, when Shanghai was in a city-wide lockdown that would last two months.

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