China stocks edged lower on Wednesday, as excitement fades about Shanghai coming out of lockdown amid lingering concerns over the economy.

** China's bluechip CSI300 Index dipped 0.2%, while the Shanghai Composite Index fell 0.1%. The indices had rebounded over the past weeks.

** Shanghai, China's financial hub, sprung back to life on Wednesday after two months of bitter isolation under a ruthless COVID-19 lockdown.

** It comes after China's cabinet announced a package of 33 measures covering fiscal, financial, investment and industrial policies on Tuesday to revive its pandemic-ravaged economy.

** However, analysts expect the Chinese economy to contract in the second quarter, and the recovery to be a grinding process heavily dependent on COVID developments, with consumers and businesses unlikely to regain confidence immediately.

** Much has been made of the ending of Shanghai restrictions today, with many seeming to think it offers an instant panacea to an Asian slowdown. Unfortunately, I must add a word of caution here," wrote Jeffrey Halley, senior market analyst, Asia Pacific OANDA.

** "China's zero-COVID strategy has not suddenly gone away... any returning outbreaks in Beijing or Shanghai or Shenzhen etc, will put China back to square one."

** Song Xiangqian, chairman of private equity firm Harvest Capital, expects a full recovery to pre-pandemic levels to take years.

** In China, banks, consumer staples and resources shares dropped, while start-up board ChiNext and real estate shares rose.

** S&P Global Ratings estimates the broad measure of nonperforming assets could worsen to 6.5% for Chinese banks in 2022, as China's COVID wave could add 1.1 trillion yuan in forborne bank loans.

** However, Kristina Hooper, chief global market strategist at Invesco, said there could be an opportunity in Chinese stocks, whose valuations are very attractive. "In addition, I anticipate continued monetary policy accommodation and strong fiscal stimulus." (Reporting by Shanghai Newsroom; Editing by Shailesh Kuber)