SHANGHAI: China stocks rose on Monday, as investors looked past surging Covid-19 infections in the country and bet on a likely recovery in consumption trends. Defence-related shares jumped amid heightened tensions around the Taiwan Strait.

China's blue-chip CSI300 index rose 0.5% to 3,849.04 by the lunch break, while the Shanghai Composite Index gained 0.7%, to 3,067.54 points. Hong Kong markets were closed on Monday for Christmas.

Infections surged across China after Beijing made sweeping changes to its zero-Covid policy that had put hundreds of millions of its citizens under relentless lockdowns and battered the world's second-largest economy. China's Zhejiang, a big industrial province near Shanghai, is battling around a million new daily Covid-19 infections, a number expected to double in the days ahead, the provincial government said on Sunday.

However, investors bet consumption will recover next year as the country learns to live virus. The CSI Travel index added as much as 4.3% to the highest level in 20 months, while an index tracking hotel and catering stocks surged 4.5% to a near seven-year high.

Meanwhile, 43 Chinese air force planes crossed the Taiwan Strait's median line in the past 24 hours, Taiwan's Defence Ministry said on Monday, as Beijing continued its military activities close to the Chinese-claimed island. The CSI Defence Index gained more than 2%, on track to have its best day in two months.

China's Ministry of Foreign Affairs on Saturday expressed "strong dissatisfaction and resolute opposition" towards the U.S. National Defense Authozisation Act, which was signed into law by U.S. President Biden the day before.

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