China is working on plans to scrap a system that penalizes airlines for bringing virus cases into the country, according to people familiar with the matter, a sign authorities are looking for ways to ease the impact of the "COVID zero" policy.

The State Council, which oversees China’s bureaucracy, recently asked government agencies including the civil aviation regulator to prepare for ending the so-called circuit-breaker mechanism, said the people, asking not to be identified because the matter is sensitive. The system sees airlines banned temporarily from specific routes into China for one-to-two weeks, depending on how many COVID-positive passengers they bring in to the country. A similar mechanism for Hong Kong was halted in July.

The request is part of a broader three-step plan devised midyear to normalize China’s aviation industry, the people said, with the country effectively cut off from the rest of the world by its pandemic border curbs.