Rarely, Chinese Prime Minister Li Keqiang has just drawn up a gloomy assessment of the national economy, undermined by anti-Covid restrictions and global instability with the war in Ukraine.
According to him, the Middle Kingdom is experiencing a "critical moment" facing difficulties "even greater than in 2020".
In May, China even unveiled its worst economic performance for two years, with consumption at its lowest and unemployment close to an all-time high.
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“We are now at a critical moment, which will determine the economic trend for the whole year.
We must seize this window of opportunity to bring the economy back on track,” he pleaded.
Indeed, this economic slowdown since the beginning of the year jeopardizes the growth target of around 5.5% set by Beijing.
"Since March and even more so since April, economic indicators on employment, industrial production, electricity consumption and the transport of goods have experienced a marked decline," admitted the Prime Minister during a teleconference in front of thousands of local officials.
Xi Jinping weakened
Missteps that come at the wrong time for Xi Jinping who is to be reappointed as head of the Chinese Communist Party (CCP) in the fall.
However, the strong man of Beijing has been drawing his legitimacy for years thanks to the continuous increase in the purchasing power of the population.
But with the “zero Covid” policy put in place by the regime to limit the number of deaths, critics have emerged both to denounce the rigorous confinements of the populations but also this political choice which has led to the closure of many businesses, factories, travel within the country… Even if containment seems to be easing somewhat in Shanghai, its 25 million inhabitants remain subject to strict restrictions.
For its part, Beijing has reinforced its anti-Covid measures.
Added to this is the unstable world situation with the war in Ukraine in particular, with a slowdown in growth in Europe and the appearance of new challenges such as the energy crisis or the return of high inflation.
If in 2020, China managed to quickly reverse the downward trend of some economic indicators thanks to strict epidemic control and rapid resumption of work, this time the challenges are a little different.
“More efforts must be made”
Chinese Premier Li Keqiang said development was key to "solving all problems in China", and urged "swift action now to get the economy back on track".
"More efforts should be made to support market entities to support people's employment and livelihoods, ensure reasonable economic growth in the second quarter, and reduce the unemployment rate as soon as possible," he said adding that 33 measures to stabilize the economy were taken at a recent meeting of the executive of the State Council.
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He gave an order to government departments to introduce concrete measures by the end of May and the State Council is to dispatch task forces to twelve provinces today to oversee local work… In other terms, Beijing will take matters directly into its own hands.
Local governments will have to provide aid, promote loans to businesses, lower interest rates for start-up loans or even encourage the arrival of new foreign capital.
For the authorities, the results should be visible from the second half of this year.
