The dilemma caused around the “zero COVID” policy causes a brake in a country that is usually acclaimed for the speed with which the dictated from above
By
Chinese regime chief Xi Jinping and Premier Li Keqiang attend the second plenary session of the National People’s Congress (NPC) at the Great Hall of the People in Beijing, China, on March 8 (Reuters)
The last time a senior Chinese leader impromptu addressed thousands of officials in February 2020, Xi Jinping called for a “people’s war” against the Covid-19 at the start of the pandemic.
On Wednesday, the prime minister Li Keqiang held an equally rare video call with thousands of cadres across the country to warn of an economic crisis even worse than two years ago, asking them to better balance Covid controls and economic growth.< /p>
However, many policy enforcement officials on the ground are unsure who to listen to: Xi continues to insist on the need for officials to press so that there are no cases of Covid-19, while Li continually urges them to boost the economy and achieve pre-set growth targets.
This dilemma is leading to gridlock in a nation normally hailed for swift enforcement of dictates from above, according to eight senior local government officials and financial bureaucrats who asked not to be named because they are not authorized to speak publicly.
Although the Investors and analysts viewed Li’s impromptu meeting as an attempt to bolster consensus on the urgency of reviving the economy, with four senior officials saying it failed to change their view that controlling the outbreak of Covid was still a priority. One of them said that from a personal career point of view, the hard work of cadres means nothing if they fail to contain an outbreak, while the advantage of starting economic projects was limited.
< p class=”paragraph”>Perhaps the most telling detail of Li ‘s gargantuan gathering was who didn’t show up. Communist Party top officials in many cities were absent because they had to focus on ensuring control of Covid, one of the people said, adding that it indicated work on the pandemic was still ahead of the curve. of the economy. The attendance of party bosses was not compulsory.
Xi Jinping and Li Keqiang at Tiananmen Square in Beijing on October 1, 2019, to commemorate the 70th anniversary of the founding of the People’s Republic of China (AFP)
The State Council , supervised by Li, did not immediately respond to faxed questions.
Although Li did not criticize the Covid Zero policy or suggest a change to it, he showed frustration “ palpable” due to the slow pace at which local governments were enacting the stimulus measures approved in recent months, according to Trey McArver, co-founder of the research firm Trivium China.
“He is being put in the impossible position of trying to rescue the economy without being able to adjust the only policy – Covid zero – that is causing the most economic damage,” McArver said, referring to Li.
The stakes are especially high, as the Chinese Communist Party is preparing to hold a twice-in-a-decade leaders’ conclave later this year in which Xi is expected to win a historic third term. The party leadership will also be revamped, clearing the way for other cadres to rise through the ranks if they manage to avoid any missteps, especially in dealing with Covid outbreaks.
The paralysis is reflected in market sentiment. The benchmark CSI 300 index was flat after falling as much as 1.1% on Wednesday, while Hong Kong stocks fell.
Li’s meeting on Wednesday brought together cadres down to the county level, with officials from nearly every government department, including propaganda, environment and utilities, according to notices posted on county government websites.
A man crouches at a barricade in a shopping area during the lockdown amid the coronavirus disease (COVID-19) pandemic, in Shanghai, China, May 26, 2022 (Reuters)
The prime minister used that platform to launch his harshest warnings about the weak performance of the economy, stating that “the difficulties in some aspects, to a certain extent, are greater than when the epidemic hit us badly in 2020”. He said that China must avoid a contraction in the second quarter, adding that the nation would pay a huge price with a long road to recovery if the economy cannot continue to expand at a certain rate.
Deep drop
In a separate act, Li also urged local officials to ensure a bountiful harvest for the summer crop in order to meet annual grain production targets and stabilize prices, China National Radio reported on Thursday.
The latest official data showed a contraction in industrial production for the first time since 2020 and a jump in the surveyed unemployment rate to 6.1% in April, close to a record. High-frequency data for May showed the economy remained in a deep depression, according to Bloomberg‘s aggregate index of eight indicators.
Xi he has not directly addressed the depth of China’s economic struggle in recent weeks, though his more generic comments have received prominent treatment in state newspapers. “China’s determination to open up at a high level will not change and China’s door will open even wider to the world,” Xi said at a recent anniversary meeting of the Council of Trade, in a typical comment.
A man takes a photo on an empty street during the lockdown, amid the coronavirus disease (COVID-19) pandemic, in Shanghai, China, May 26, 2022 (Reuters)
Li, on the other hand, has emerged as a more candid figure. At the same business council event held in Beijing earlier this month, Joerg Wuttke, president of the The European Union Chamber of Commerce in China, said the prime minister “woke up” when some delegates shared their frustrations over China’s Covid policy.
“Li came up afterwards and asked how we were doing and how business was going,” said Wuttke, adding that he was surprised measure. “It was a very positive gesture. The fact that he crossed the street, introduced himself and said ‘let’s talk’ was impressive ”.
A lot of verbiage
Wuttke said Xi’s online comments included “a lot of verbiage< /b>” and no opportunity for an exchange of views.
Xi has tried to maintain a Covid-Zero policy, while proposing GDP growth of 5.5% this year, a target that has put local officials on the spot. Economists surveyed by Bloombergthey forecast that the economy will grow 4.5% this year.
Managers of several state-owned banks have been told they will be held accountable if they fail to meet lending targets. They have struggled to implement orders to introduce more liquidity as eligible companies are reluctant to borrow in the uncertain outlook for the economy, according to bank officials and executives.
Still, some analysts remain hopeful that the worst may soon be over.
“Premier Li’s speech yesterday was incredibly important in adjusting expectations to a more realistic position,” James Sullivan said. b>, Head of Asia-Pacific Equity Research at JPMorgan Chase & Co. “Then we can start looking forward”.
(C) Bloomberg.-
KEEP READING: