China calls for “urgent” support for its economy

Posted on Wednesday, May 18, 2022 at 5:49 pm

Crippling activity, rising unemployment, disrupting supply chains: Chinese Prime Minister Li Keqiang on Wednesday called for “emergency” measures to support the national economy wracked by anti-Covid restrictions.

China has been facing a resurgence of the epidemic for several months, affecting many parts of the country to varying degrees.

Under the Zero Covid health strategy, many cities have been closed, including the major port city of Shanghai, which is severely affecting production and consumption.

“All departments in all localities should reinforce their sense of urgency. Any appropriate measures should be implemented wherever possible,” Li Keqiang said, according to state broadcaster CCTV.

He added that these support measures should aim at a “quick return to normal” for an economy that has shown signs of “clear weakness” since March, and especially in April.

China unveiled its worst economic performance in two years on Monday, with the unemployment rate jumping last month to 6.1% – close to an all-time high.

This economic slowdown threatens the 5.5% growth target set by Beijing, in a politically sensitive year that should see President Xi Jinping’s reappointment as head of the Chinese Communist Party.

It derives its primary legitimacy from the increasing purchasing power of the population.

However, the Zero Covid strategy, which the authorities have defended with their feet and toenails, is increasingly objected to by the general public and especially the business community, who are concerned about the threats posed by lockdowns to activity.

– Open door –

China appears to be increasingly self-isolating: the borders are closed to most foreign travelers, and the country has canceled or postponed several international sports competitions in recent days, in the name of the health situation.

“China’s determination to open up at a high level will not change,” Xi Jinping said at a trade conference on Thursday, according to a statement from the Foreign Ministry.

“China’s door will open wider to the world,” he said, a phrase he regularly utters in his speeches.

His comments come as the country has stopped issuing new passports to its citizens unless they can justify the need to travel abroad – such as to work or pursue studies.

Faced with a bleak situation, the government has doubled down on its measures in recent weeks to support the economy.

Li Keqiang called again on Wednesday for help to companies in the tech and digital sector that want to list on the stock market in China as well as abroad – a reversal of current policy.

Because under pressure from Beijing, VTC champion Didi Chuxing, the Uber equivalent in China, hastily withdrew from the New York Stock Exchange in December, five months after listing.

The initial public offering in the United States upset the Chinese authorities, who were afraid to transfer sensitive data.

– Patching? –

Since the end of 2020, China has been targeting certain practices of the digital giants, particularly in relation to the collection of personal data deemed offensive and competition.

Beijing has doubled down on strikes against powerful internet companies, blocking or sanctioning international fundraising for abusing a dominant position.

But on Tuesday, the communist force welcomed many business leaders, raising hopes of reforming the sector. Robin Li, head of the Chinese search engine Baidu, was among the guests present.

We must adapt to the changes brought about by the digital economy […] Vice Premier Liu He said, citing CCTV: “

At the end of April, the government had already shown its support for the digital economy. However, the difficulties faced by this sector remain.

Code for this bad patch: Internet giant Tencent (video game, WeChat messaging app) on Wednesday reported close to zero quarterly sales growth.

This is the slowest pace since the company went public in 2004, according to Bloomberg.

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