Markets

New China Premier Vows ‘Better Environment’ for Private Sector

 

China’s new premier Li Qiang sought to reassure the country’s private sector on Monday, saying the environment for entrepreneurial businesses will improve.

“Developing the economy is the fundamental solution for creating jobs,” Li, 63, said in the Great Hall of the People in central Beijing after the closing of the annual session of China’s parliament. Equal treatment would be given to all types of companies, he added.

The former Communist Party chief of Shanghai, Li was installed as premier on Saturday during the National People’s Congress (NPC). He is tasked with reviving the world’s second-largest economy after three years of strict Covid curbs.

 

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Making his public debut in a media conference, the close ally of President Xi Jinping said China will take measures to boost jobs and urged officials at all levels to “make friends” with entrepreneurs.

Li faces challenges including weak confidence among consumers and private industry, sluggish demand for exports and worsening relations with the United States.

The Chinese private sector has been rattled in recent years by a sweeping regulatory clampdown targeting industries including internet platforms and education businesses. 

 

‘Incorrect remarks’ cause of worry

A career bureaucrat in some of China’s most economically vibrant regions, Li talked up his track record with the private sector.

“Indeed, last year there were some incorrect remarks about the development of the private economy, which worried some entrepreneurs,” Li said in his televised address, without giving details.

“Private entrepreneurs or enterprises will enjoy a better environment and broader space for development… we will create a level playing field for all kinds of market entities and we will make further efforts to support private entrepreneurs to grow and thrive,” he added.

Investors hope the new premier’s close ties with Xi will enable him to push for more business-friendly policies. But analysts said his remarks on Monday gave little insight on this front.

Beijing should address the easier access to financing state-owned companies currently enjoy over their private sector counterparts, Alfredo Montufar-Helu, head of think tank The Conference Board’s China Center, said.

It should also consider more stimulus measures for private companies hit hard by three years of Covid, he added.

“Achieving the (government) goals of stabilizing economic growth and building self-reliance clearly necessitates the participation of the private sector, as it contributes to over half of China’s GDP growth and accounts for the majority of employment… but the devil is in the details.”

 

5% growth ‘won’t be easy’

At the opening of the annual parliamentary session, China set a GDP growth target of about 5% percent. That was its lowest goal in nearly three decades, after the economy grew just 3% last year.

Achieving the target would not be easy, with China facing many difficulties this year, Li said.

Li replaces Li Keqiang, who retired after serving two five-year terms, during which he was seen to be increasingly sidelined as Xi tightened his grip on control of the economy.

At under 90 minutes, Li’s media briefing was shorter than the annual sessions held in recent years by his predecessor, which sometimes exceeded two hours.

 

‘Great Wall of steel’

Earlier on Monday, Chinese President Xi Jinping said China needs security to develop and must modernise its military to make it a “Great Wall of Steel”.

He also called for China to step up its ability to safeguard national security and manage public security.

Xi was speaking for the first time since the rubber-stamp parliament unanimously voted to confirm him for an unprecedented third term as president.

“Security is the foundation for development, stability is the prerequisite for prosperity,” Xi, 69, said.

The ruling Communist Party is expected to tighten party oversight over security matters, a move that comes after Xi replaced top security officials with his trusted allies.

Xi also said in an effort towards “common prosperity,” China will distribute the fruits of development more equitably. Common prosperity is Xi’s signature policy of reducing the wealth gap.

The Chinese president also reiterated that the country must achieve greater self-reliance and strength in science and technology, amid an effort by the United States to block China’s access to chip making equipment and other cutting-edge technologies.

 

  • Reuters, with additional editing by Vishakha Saxena

 

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JD.com Cuts Exec Salaries Under ‘Common Prosperity’ Pressure

 

 

Vishakha Saxena

Vishakha Saxena is the Multimedia and Social Media Editor at Asia Financial. She has worked as a digital journalist since 2013, and is an experienced writer and multimedia producer. As a trader and investor, she is keenly interested in new economy, emerging markets and the intersections of finance and society. You can write to her at vishakha.saxena@asiafinancial.com

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