China’s economy is facing a slew of challenges from job creation to government red tape and low efficiency in spite of a strong recovery in the first quarter, Premier Li Keqiang told officials in a recent meeting. Li made the assessment at the annual national conference on clean governance on April 26, four days before the 25-member Politburo, headed by President Xi Jinping, convened a meeting to discuss first-quarter economic performance and decided to double down on tackling economic weakness. The country reported a record 18.3 per cent growth in gross domestic product for January to March compared with a year earlier, when the coronavirus outbreak shut down much of the economy and helped cause a contraction of 6.8 per cent. Despite its outward confidence in being among the first countries to recover economically from the pandemic, Beijing recognises that growth is on a weak footing and there are many challenges ahead. According to a transcript published on Sunday night by the official Xinhua news agency, Li warned against complacency as he noted difficulties and challenges over employment, the private sector, and government inefficiency and red tape. “The foundation of our economic recovery is still shaky,” Li told the officials. “Small and medium enterprises, as well as self-employed businesses, are suffering from rising costs, which means there is heavy pressure on employment.” Potentially adding to the country’s employment challenges is that a record 9.1 million students are expected to graduate from mainland Chinese universities this year, joining graduates returning from overseas and the country’s vast army of migrant workers. China has this year targeted the creation of more than 11 million urban jobs and an urban unemployment rate of 5.5 per cent. Last year, it targeted 9 million new urban jobs but created 11.86 million, and targeted a 6 per cent urban unemployment rate but achieved 5.6 per cent, according to official statistics. “It will not be easy to achieve this year’s employment target,” Li said at the April meeting. The premier warned of numerous difficulties still facing the private sector, which he said contributed more than 60 per cent of China’s GDP and provided over 80 per cent of its jobs. According to Li, of China’s 140 million registered market entities, only about 70 per cent were operating. “These approximately 100 million companies are the foundation of our economy,” he said. “We must do our job properly, satisfying their demands and pressing ahead with our anti-corruption campaigns.” Although the economy had been stabilising, the vitality of market entities had not fully recovered, Li said, with growing uncertainties over rising inflation and property prices, and tensions with the US, Australia and other nations that could affect grain and energy imports. “Those problems can impact economic stability, so we should pay close attention,” he said. He said that problems such as too much bureaucracy and poor implementation of central government policies at local levels remained prevalent, with corruption and red tape being too prominent in certain sectors. In January, Xi told party officials at a meeting that corruption remained “the biggest threat to the [Communist Party’s] rule”. What is China’s GDP and why is it important? In the latest case, Xiao Yi, vice-chairman of the Jiangxi provincial committee of top political advisory body the Chinese People’s Political Consultative Conference, has been put under formal investigation for suspected serious violation of party discipline and laws. Xiao is being investigated by the Central Commission for Discipline Inspection and the National Supervisory Commission, according to a statement on Monday. It follows the announcements of investigations by the party into seven other officials so far this year. They include Song Liang, Gansu’s deputy governor, Peng Bo, vice-director of the Office of the Central Leading Group on Prevention and Handling of Cult Issues, Yin Jiaxu, former party chief and chairman of China North Industries Group Corporation, China’s largest weapons manufacturers, and Liu Xinyun, former head of the Network Security Bureau of the Ministry of Public Security.