05/29/2020, 15.15
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Li Keqiang's recipes for China’s sick economy

by Wang Zhicheng

At the press conference marking the end of the National People's Congress, Premier Li listed policies designed to boost the economy, such as special government bonds, tax breaks, lower business expenses, cuts in bank interest rates, and more welfare spending. Xi Jinping's "dream" of beating poverty by the end of 2020 remains valid. Li’s speech was nice but was thin on relations with the US and Taiwan.

Beijing (AsiaNews) – The recipes for fixing China’s sick economy during the crisis caused by the pandemic were at the centre of yesterday’s press conference by Chinese Premier Li Keqiang.

The meeting with journalists was held at the end of the National People's Congress (NPC), and was conducted by video link because of pandemic regulations.

First of all, Mr Li justified the government's move not to set growth targets this year, given the situation that requires "forceful" measures to revive the country's economy.

According to experts, China’s economy contracted by 6 per cent in the first quarter of 2020 and will only start recovering in the third. The International Monetary Fund estimated in April that China’s economic growth rate could be around 1.2 per cent for the whole year.

However, for the Chinese government, the economy must grow around 6 per cent to guarantee employment. This is especially important since in recent months, the ranks of the unemployed and poor people have risen by the tens of millions.

Li stressed that the government’s primary concern is to guarantee work for 900 million people, and that the coronavirus is creating new poor. Still, he reiterated that Xi Jinping's "dream" of eradicating poverty by the end 2020 remains valid.

Unlike 2008, when Beijing implemented a 4-trillion-yuan (US9 million) infrastructure expenditure package, this time the answer involves a higher debt, special government bonds, tax breaks, lower business expenses, cuts in bank interest rates, and more welfare spending.

“Some people said that the size of support policies fell below expectations, and I do hear such feedback,” Li said. However, he insisted that the government’s policy response “is pretty forceful”.

As part of this, Beijing plans to cut “nonessential” expenditures and is urging local administrations to do so the same and avoid “spending splurges”.

Unlike the belligerent and confrontational state media, Li Keqiang was very calm and used a more moderate language towards the United States and Taiwan.

Li said he rejected the "cold war mentality" between China and the United States, noting that trade between the world’s two largest economies should “continue to follow business rules”.

He did not however speak about the phase-one trade deal reached with the US nor the US demand for protection of intellectual property.

On Taiwan, he said that China was always open to dialogue with all parties that respect China’s sovereignty over the island. This that does not sit well with Taiwan’s ruling Democratic Progressive Party, which is pushing for recognition of Taiwan’s de facto independence.

Photo: Xinhua

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