Chinese Premier Li Qiang steps up prep for maiden work report that could seek to restore private-sector confidence

Chinese Premier Li Qiang steps up prep for maiden work report that could seek to restore private-sector confidence

Premier Li Qiang could further promote the significance of the private sector during his maiden government work report in March, analysts said after China’s No 2 official stepped up preparations for the highly anticipated address by urging steely confidence, as well as a clear-eyed understanding of the risks and complexities that lie ahead.

Li is set to address the annual legislative session of the National People’s Congress in early March, and he will review the government’s accomplishments over the last year while giving general guidance on the social and economic policy direction for 2024.

It will also include a suite of targets for China’s gross domestic product (GDP) growth, inflation and fiscal deficit ratio.

The world’s second-largest economy is widely expected to again aim to achieve GDP growth of around 5 per cent for this year, after having posted 5.2 per cent year-on-year growth in 2023.

During a symposium on Wednesday to solicit opinions on the drafting of the annual work report, Li and Executive Vice-Premier Ding Xuexiang heard policy recommendations from minor political parties and the semi-official All-China Federation of Industry and Commerce.

The suggestions covered macroeconomic management, scientific and technological innovation, the nurturing of emerging industries, reinvigorating market dynamism and promoting green development.

2024 marks the 75th anniversary of the founding of the People’s Republic of China, and Li said it will be a crucial year for expeditiously delivering the goals and tasks set out in the 14th five-year plan for 2021-25.

Li also pledged better policy consistency, including between fiscal and monetary measures, and increased efforts to level the playing field for all businesses while speeding up the construction of a nationwide unified market.

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Building a nationwide unified market was touched on at the tone-setting central economic work conference in December, with Chinese leaders counting on the tool to grease the wheels of domestic demand, convince foreign investors to remain in China and counter US decoupling attempts.

The much-anticipated work report will shed light on how Li and his cabinet plan to execute Beijing’s economic strategies to help combat a domestic downturn and stave off formidable headwinds from abroad.

Despite the higher-than-expected 5.2 per cent economic expansion last year, China’s economic recovery remains patchy, with the property sector remaining depressed, developers and local governments saddled with crushing debt, and feeble confidence among the private sector and foreign firms.

Protracted trade tensions with the United States, rising frictions with the European Union, ongoing Western technological containment and de-risking also compound the external landscape facing China.

This can be a hint that Li Qiang may accord further significance [to the private sector]
Zhu Tian, economist

Li had earlier solicited ideas from Central University of Finance and Economics president Ma Haitao, Baidu founder Robin Li and other economists and entrepreneurs at a separate meeting on Tuesday.

Li Daokui, director of Tsinghua University’s Academic Centre for Chinese Economic Practice and Thinking, also attended the meeting on Wednesday, although the official readout from the state-backed Xinhua did not provide details.

The Tsinghua University academic is one of the most vociferous voices calling for elevating the political status of China’s private economy to enjoy the same treatment as that of the state sector.

“This can be a hint that Li Qiang may accord further significance [to the private sector], since the Xinhua readout also mentioned invigorating market dynamism, which is, in a nutshell, about restoring the confidence of the private economy,” said Zhu Tian, a professor of economics at the China Europe International Business School in Shanghai.

Private investment in China contracted by 0.4 per cent, year on year, in 2023, contrasting the 6.4 per cent annual growth in state-sector investments.

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China GDP: Beijing’s long to-do list to boost its economy in 2024

China GDP: Beijing’s long to-do list to boost its economy in 2024

In July, Beijing sent its strongest message ever to China’s private sector, with a 31-point action plan aimed at shoring up the ailing sector that underpins economic growth, jobs and technological innovation, but it seemingly failed to revive sentiment.

Premier Li has also met with a number of foreign leaders since the start of the year, including visits to Switzerland and Ireland and an effusive speech at the World Economic Forum in Davos last week.

He used the occasions to play up China’s economic prospects and called on international investors to keep faith in China.

Last year, China’s inflow of foreign investments fell by 8 per cent, year on year, to 1.13 trillion yuan (US$159 billion).

We will strive to create a market-oriented, internationalised business environment
Premier Li Qiang

On Thursday, Li also received a 200-strong Japanese business delegation in Beijing that included executives and representatives from the Japan Business Federation, Japan-China Economic Association and the Japan Chamber of Commerce and Industry.

Li hailed economic and trade ties as a ballast for restoring amicable ties between China and Japan.

He also appealed for concerted efforts to extract the potential from economic relations and to stabilise industrial and supply chains.

“China welcomes more investments, will adhere to the opening-up policy, slash the negative list, lift access restrictions in the manufacturing sector, and guarantee fair treatment for foreign enterprises,” Li told the delegation on Thursday.

“We will strive to create a market-oriented, internationalised business environment.”

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