China's PM admits economic problems: "Unexpected shocks"

Created: 08/18/2022 05:06

China is pursuing a strict zero-Covid strategy.

This puts a massive strain on the country's economy.

Now there is open talk of unexpected shocks.

Beijing – Not only Europe is struggling with the consequences of the corona pandemic.

Even the economically strong China now admits that it also has problems.

According to Prime Minister Li Keqiang, China's economy has to fight against "shocks beyond expectations" suffered in the second quarter.

"Now is the most critical moment for economic recovery," said the premier at a meeting with provincial leaders in the southern Chinese metropolis of Shenzhen the day before, according to official sources on Wednesday.

China: Corona lockdowns slow down growth

Dealing with the pandemic must be "effectively" coordinated with economic and social development "to ensure effective Covid-19 containment, economic stability and safe development." The prime minister indirectly pointed to the lockdowns and other restrictions imposed by the government China's strict zero-Covid strategy, which is severely slowing down the growth of the world's second largest economy.

He called on the six strongest provinces, which together account for 45 percent of economic output, to drive growth "proactively".

"They should effectively implement a policy package to stabilize the economy and develop their own potential." They should also play a leading role in creating and safeguarding jobs.

"Sluggish demand is a distinct impediment to economic activity."

Prime Minister's admission: Chinese economy is weakening

The PM's call is a public admission that the Chinese economy is weak.

Important economic data such as industrial production, retail sales and fixed capital investments again fell short of expectations in July.

In order to give the economy new impetus, China's central bank surprisingly lowered certain interest rates.

In the second quarter, China's economy grew by just 0.4 percent, although the government was actually targeting 5.5 percent growth for the year as a whole.

The International Monetary Fund (IMF) expects only 3.3 percent in China this year.