Premier Li Keqiang warns China's economic recovery not solid

China's economy struggles to recover from recent Covid-19 lockdowns. Li announces more reforms and openness. However, the forecast for the national GDP is below expectations. A 74 billion euro domestic investment plan is ready. Meanwhile, the flight of foreign capital from the country continues.

Beijing (AsiaNews) - The Chinese economy is recovering, but its foundations are not "solid," according to Premier Li Keqiang. The premier was speaking yesterday during a meeting with the leaders of Shanghai and the provinces of Guangdong, Fujian, Jiangsu and Zhejiang: the country's economic engines.

China is trying to recover from the consequences of harsh lockdowns imposed in recent months to contain a resurgence of Covid-19. The pandemic danger remains for the country as new outbreaks of infection emerge, and the effects of the Ukraine war on global supply chains and commodity prices aggravate the picture.

Until April Li had largely played a secondary role, bypassed by President Xi Jinping even on economic issues, which in the Chinese power system are usually the prerogative of the premier. Questionable choices made by Xi, such as those on combating the pandemic ("zero-Covid" policy), control of technology companies and restrictions on real estate giants have thrust Li back into the limelight, and with him an economic approach more in line with the free market.

In his speech to provincial leaders, Li emphasised that China will continue to promote reforms, improve the business environment and open up to international markets. At the end of May, the government approved a package of 33 economic measures, including additional tax cuts of 140 billion yuan (EUR 20.6 billion). According to Reuters, a 500 billion yuan (EUR 73.7 billion) infrastructure investment plan is also ready.

All this may not be enough to reach the annual growth target, set by the government at 5.5%, and Li's words would confirm this. For a group of economists quoted by the Yicai portal, in the second quarter of the year the Chinese economy grew by only 0.9%, with a year-end growth projection of 4.3% - experts quoted by Nikkei Asia lowered the figure to 4.1%.

The Chinese recovery is slowed down by rising unemployment and weak real estate investments. On the other hand, infrastructure spending, exports and a slight increase in consumer spending are holding up.

An indirect sign that the economic situation in China is difficult is the continuous flight of capital abroad. The Institute of International Finance reports that in June foreign investors disposed of Chinese bonds for a net value of EUR 2.5 billion: the largest shift of foreign funds out of the country in seven years.

• china
• beijing
• li keqiang
• xi jinping
• economy
• crisis
• covid-19
• pandemic
• lockdown
• capital flight
• gdp