China’s coronavirus recovery at ‘critical point’, says Li Keqiang, singling out five regions to carry the economy
- Premier Li Keqiang singled out Shanghai, Guangdong, Jiangsu, Zhejiang and Fujian to lead China’s economic recovery, which is ‘still unstable’
- The provincial-level jurisdictions together account for about one-third of China’s economic output and are a major source of fiscal revenue
Chinese Premier Li Keqiang has told five prosperous coastal provinces that form the backbone of the economy to “exhaust all means” to stabilise production and employment, as the country stands at a “critical point” in economic recovery from the coronavirus pandemic.
Shanghai and southeastern provinces Guangdong, Jiangsu, Zhejiang and Fujian must unclog supply chain bottlenecks and steer the economy back on track as soon as possible, while controlling fresh outbreaks, Li told a symposium on Thursday attended by local officials.
These provincial-level jurisdictions – which together account for about one-third of China’s overall economic output – should continue to do the heavy lifting for national growth and securing fiscal strength, said Li, according to the official Xinhua News Agency.
“The foundation for recovery is still unstable, more hard work is needed to stabilise the economy,” Li said at the meeting in Fujian. “Development is the foundation and key to solving all problems in our country.”
“We should be highly effective when coordinating Covid control and economic and social development, while giving play to the initiative of both central and local governments.”
More support measures – especially for infrastructure investment – are forecast for the second half of the year, although the zero-Covid policy is certain to stay in place for the foreseeable future.
The five coastal regions singled out by Li contribute nearly 40 per cent of China’s total fiscal income and about 80 per cent of all localities’ net revenue transferred to the central government, playing a pillar role for the treasury and subsidising poorer central and western Chinese regions.
In late May, Li said the impact of Covid-control “has already begun to hit our fiscal revenue”, especially in the Yangtze River Delta.
Shanghai’s fiscal income fell by 16.8 per cent between January and May, according to data from the National Bureau of Statistics.
Neighbouring Jiangsu, the second largest provincial economy in China, suffered a nominal drop of 17.6 per cent in revenue during the first five months of 2022, according to the China Economic Weekly, a magazine under the official state-owned People’s Daily.
Public revenue in Guangdong, the country’s largest provincial economy, also shrank 13.4 per cent from a year earlier.
A recent spike in infections prompted fears of new lockdowns in Shanghai, while a flare up in Wuxi city in Jiangsu led to new control measures being imposed. Tech hub Shenzhen in Guangdong has also seen fresh cases this week.
“A resurgence of Omicron is not an issue in most other countries, but it remains a predominant issue for the Chinese economy,” Lu Ting, chief economist at Nomura, said on Wednesday.
“As China is the second largest economy and by far the largest manufacturing centre in the world, any new waves of Omicron are likely to have a non-negligible impact.”
At the symposium, Li called on the five regions to “exhaust all means” to maintain stable employment, as between them they generate jobs for about 70 per cent of China’s 292 million-strong migrant worker population.
Employment is at the heart of Beijing’s economic policies in coming months, as it is crucial for social stability ahead of the 20th party congress.
Li said the five trade hubs should also continue reform and opening-up, improve port logistics, stabilise foreign trade and foreign investment and take part in international competition and cooperation, as their economic resilience came from deeper engagement with the world economy.
“No matter how the international situation changes, China will unswervingly open wider to the outside world,” Li said.