“Shock Beyond Hope”
Chinese PM sees his own economy weakening

08/17/2022, 11:50 am

The statement by the head of the Chinese government is a public acknowledgment that all is not going smoothly. China’s economy is still suffering from the consequences of the pandemic. Premier Keqiang called on the six strongest provinces to become “active”.

According to Prime Minister Li Keqiang, China’s economy should fight “shocks beyond expectations” in the second quarter. According to official sources, “now is the most important moment for economic recovery,” the prime minister said at a meeting with provincial leaders in the southern Chinese metropolis of Shenzhen. Dealing with the pandemic “effectively” must be coordinated with economic and social development “to ensure effective COVID-19 containment, economic stability and secure development”.

The prime minister indirectly pointed to the lockdown and other restrictions imposed by China’s strict zero-Covid strategy, which are severely slowing 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 “activate” growth. “They must effectively implement a policy package to stabilize the economy and realize its potential.” They should also play a leading role in the creation and protection of jobs. “Sluggish demand is a conspicuous barrier to economic activity.”

The PM’s call is a public acknowledgment that the Chinese economy is weak. Key economic data such as industrial production, retail sales and fixed capital investment again fell below expectations in July. To give a new impetus to the economy, China’s central bank surprisingly lowered some interest rates. In the second quarter, China’s economy grew by only 0.4 percent, although the government was actually targeting 5.5 percent growth for the full year. The International Monetary Fund (IMF) expects only 3.3 percent in China this year.