China will protect the rights of entrepreneurs and continue to support private businesses, Premier Li Qiang said in his first public comments since taking office, while also downplaying the importance of the economic growth rate.
(Bloomberg) — China will protect the rights of entrepreneurs and continue to support private businesses, Premier Li Qiang said in his first public comments since taking office, while also downplaying the importance of the economic growth rate.
Li said citizens are more focused on issues that affect their daily lives, rather than the pace of gross domestic product.
“Honestly speaking, most people do not keep their eyes on GDP growth all the time,” he told reporters in Beijing on Monday. “What they care more about are the things that happen in their everyday life, like housing, employment, income, education, medical services and environment.”
The government will prioritize stability, which means stabilizing growth, prices and jobs, Li said. Achieving this year’s growth target of around 5% is “not an easy task” because of multiple risks, he added.
Li reiterated the government’s economic strategy at the media briefing on Monday. However, he offered little detail about specific monetary or industrial measures to be taken, only promising that macro policy combinations will be “enriched, adjusted and improved in the course of implementation.”
That’s probably because China’s economy is facing growing uncertainties both domestically and internationally, which likely requires more frequent fine-turning of policies, according to Raymond Yeung, chief economist for Greater China at Australia & New Zealand Banking Group Ltd.
“There are many small economic cycles within a year now which are susceptible to uncertainties that China can’t control, like the US Fed,” he said.
“Therefore Li can only put forward some general principles for economic policy and possibly leave specific measures such as possible rate cuts and RRR reductions for further discussions with officials,” Yeung added, the latter referring to the reserve requirement ratio, or the amount of cash banks must keep in reserve.
Li, a longtime associate of President Xi Jinping and the former Communist Party boss of Shanghai, was officially appointed premier on Saturday at the National People’s Congress, the annual parliamentary gathering.
Earlier on Monday, Xi had said China must redouble efforts to ensure stability and bolstering self-reliance in a speech to mark the start of his third term as head of state.
The premier’s comments about private businesses may help to allay concerns after regulatory crackdowns in the technology sector and against for-profit education companies spooked investors.
Beijing set a modest GDP growth target for this year after missing 2022’s goal by a wide margin, hoping consumer spending will drive the recovery after the government’s zero-tolerance approach to Covid was abandoned late last year. Economists expect growth to reach 5.3% this year.
While consumer spending has shown signs of a stronger rebound, the outlook remains uncertain. The effect of infrastructure investment — a traditional tool Beijing uses to boost the economy — has declined while local government debt burdens have ballooned. Exports are also falling and the housing market is yet to recover from a historical slump.
Yeung noted that Li did not mention the real estate market at all during the briefing.
Property is “the most important” sector for China’s cyclical growth in the short term, he said, adding that it’s key to watch whether the government expands its position on the real estate industry to account not just for living, but also for property as a product that households can invest in.
Li also made the following comments to the media on Monday:
Private Enterprise
China has a super-sized market with huge demand, Li said. There are many new sectors that can be tapped, providing great promise for private businesses, he said.
He called for officials at all levels to sincerely care and support the growth of the private sector. They should take the lead to respect entrepreneurs and create a good environment for business creation, he said.
Employment
Li said the solution to the employment problem lies in economic growth. The government will continue to pursue an employment-first policy, and will increase support of employment services, and technical training.
The number of college graduates will hit more than 11 million this year, which will add to pressure on job creation, he said.
Population
While some worry that China’s demographic dividend is disappearing as the population shrinks, Li said it’s not that simple an issue. The rich supply of human resources remains a strength, he said, citing more than 240 million people that have received higher education.
He said the focus shouldn’t be on the size of the population, but its quality.
China will carefully study and fully debate the retirement age issue and introduce policies at a proper time, Li said.
(Updates with economist’s comments.)
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.