Premier Li steps out of Xi Jinping’s shadow, sounds the alarm over the economy
China could miss the growth targets set by the government. The current economic situation is worse than at the start of the pandemic in 2020. Li is called to solve the economic problems created by Xi's policies. From here to the Communist Party Congress in the fall, the two leaders and their factions will be vying for power.
Beijing (AsiaNews) – Chinese Premier Li Keqiang has sounded the alarm about the state of China’s economy, warning that this year the country might not reach the economic growth target set by the government at 5.5 per cent.
Speaking yesterday at an emergency meeting with local authorities, state-owned enterprises and financial institutions, Li admitted that, due to COVID-19 and lockdowns, the current economic situation is worse than in 2020 when the pandemic broke out.
Li urged the 100,000 local leaders present at the meeting to take steps to stabilise the economy and promote employment. However, analysts note his leeway to change direction is limited.
Every government action must comply with President Xi Jinping's zero-COVID policy, considered by many experts to be too stringent and too much of a brake on economic growth.
According to Bloomberg, this year China’s GDP will see a 4.5 per cent increase, far from what was forecast.
Failure to overcome the pandemic crisis and a negative economic trend represent a political problem for Xi, who is expected to obtain a third, historic mandate to rule at the 20th Congress of the Communist Party of China this fall.
Li is trying to avoid an economic slowdown, but paradoxically, a poor performance of China’s economy could politically favour him and his faction (the Communist Youth) in the Party.
Since taking office in March 2013, Xi has centralised all decision-making, including in the economic sphere, which traditionally is the premier’s prerogative.
So far Li has largely played second fiddle. Questionable choices made by Xi, like his approach to the pandemic, controlling technology companies and restrictions on real estate giants, have however brought him back to the front row.
As noted by several analysts, many party leaders think that the premier should have a greater say in solving the country's economic problems.
Li's political "comeback" has a precise date: April 25. On that day, the People's Daily, the Communist Party’s official mouthpiece, published a very long speech by the premier at a conference: 10,000 characters, a length usually reserved for Xi.
It contained all the elements of "Likonomics", the term used for Li's economic policy, centred on a return to an approach more in line with the free market, which was set aside by Xi at the beginning of his mandate.
In his speech on 25 April, Li called for steps to reboot the economy, respect market mechanisms, support small and medium-sized enterprises and employment, and lower taxes.
On this last point, Li has already taken the initiative. On Monday, the government approved a package of 33 economic measures, including further tax cuts worth 140 billion yuan (US$ 21 billion).
For their part, Xi and his associates would like to clip Li's wings, especially by limiting the influence of the Communist Youth. Meanwhile, the premier has already announced that he will retire when his mandate comes to an end next spring.
Still, as Nikkei Asia pointed out, should Xi commit any misstep, Li could still take on an important role within the Party, in cohabitation with the current supreme leader.
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