Premier Li Keqiang on Wednesday acknowledged the “great pressure” facing China’s economy, both at home and in a turbulent environment abroad, but vowed the government would do all it could to drive stable and sustainable development.
“Under the complex and volatile international economic and political conditions, for a large economy like ours … stability means progress,” Li said in an article published by the state backed People’s Daily.
China’s economy has bounced back from the impact of the coronavirus pandemic early this year, expanding by 4.9 per cent between July and September, compared with a year earlier. But it faces external uncertainty due to a growing rivalry with the US and the effect of the coronavirus that is still raging across much of the world.
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Though Li said China’s economy would return to growth this year and surpass 100 trillion yuan (US$15.2 trillion), he wrote it was “very difficult to keep the economy running smoothly”.
Enterprises, especially small, medium and micro enterprises are having difficulties in production and operation.
Premier Li Keqiang
“Insufficient demand restricts the stable recovery of the economy,” he said. “Enterprises, especially small, medium and micro enterprises are having difficulties in production and operation.”
Stabilising employment and ensuring people’s livelihoods was facing “great pressure”, and China’s drive to accelerate innovation-driven growth was not meeting requirements, he added.
China’s ruling Communist Party concluded its fifth plenum – its most important political meeting – earlier this month, where it adopted “dual circulation” as its official economic policy.
The new economic strategy announced by President Xi Jinping earlier this year focuses on technological progress and development of China’s enormous domestic market for growth, and is widely perceived as Beijing’s inward-looking response to external hostility.
However, Li reiterated in the article the government was not shutting itself off from the rest of the world.
“We must not only close the door and engage in closed operation, but firmly implement the strategy of expanding domestic demand, while also making greater effort to open up,” he said.
In a meeting with academics and entrepreneurs on Monday, Li said China should leverage the newly-signed Regional Comprehensive Economic Partnership (RCEP) to push for multilateralism and free trade.
The treaty includes China and 14 other Asia-Pacific economies – though not the US and India – and covers nearly one third of the world’s population and gross domestic product.
Yao Jingyuan, a research fellow at the Counsellors Office of the State Council, said to offset growing protectionism and anti-globalisation, China must reduce its reliance on foreign technology if it wanted to achieve “high quality” growth.
“We have always chased for the speed of growth,” said Yao at a press conference on Wednesday. “This is why we don’t have sufficient drive for innovation. China’s economy is huge but it’s not strong – we lack key technology.”
China must also address threats to dominant position in global manufacturing, its shrinking working population and rising labour costs, said Yao, who was formerly chief economist at the National Bureau of Statistics
“These numbers are telling us that China’s advantages are changing,” he said. “It’s not like the old days when we had unlimited supply of cheap labour.
“We must put all our economic focus on the domestic market.”
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