How China’s economic crisis serves as unparalleled trial by fire for Premier Li Qiang

In his five months as premier, Li Qiang has been on the move both domestically and abroad, touting President Xi Jinping’s agenda while trying to empower the economy

But Li’s policy toolbox appears restrained, and it has China watchers wondering if more concrete actions will be taken to restore confidence in the economy

Reading Time:6 minutes

In his first five months as China’s premier, Li Qiang has been working to repair the nation’s battered economy. Illustration: Davies Christian Surya

Frank Tangin BeijingandKandy Wongin Hong Kong

Published: 6:00am, 27 Aug 2023Updated: 9:18am, 28 Aug 2023

This is the first part in a series about what China’s two seniormost leaders are doing, and the challenges they face, in trying to guide the nation through economic and financial turmoil. Read part two here.

From the day he was elevated to China’s premiership in March, Li Qiang has had investors and China watchers clamouring for indications of how much power he will actually wield in his bid to prop up the world’s second-largest economy while navigating uncharted waters.

The unprecedented three-year pandemic and Washington’s decoupling attempts since 2018 have severely disrupted China’s economic ecosystem, leading to record-high youth unemployment, a worsening property crisis, a reluctance among households to spend, faltering investor confidence, deflation risks and inadequate tech capabilities.

Under President Xi Jinping, the most powerful Chinese leader since Deng Xiaoping, Li has taken centre stage in handling the ongoing economic crisis since June.

His first overseas trip was to Germany and France, where he tried to convince business leaders to continue investing in China. Domestically, he convened a symposium with economists in early July to solicit solutions, and also held a meeting with eight provincial leaders late last month in Shanghai.

Premier Li Qiang speaks at a working session with French Prime Minister Elisabeth Borne in June in Paris. Photo: AP

The 63-year-old Li’s return to Shanghai was particularly notable, given that it was where he suffered the biggest crisis of his four-decade political career. As the city’s Communist Party secretary from 2017-22, he oversaw its widespread and economically crippling Covid-induced lockdowns last year.