China’s new premier tries to reassure the private sector amid widespread fears about the future

Laura He, CNN

China’s new premier tried to calm the private sector at his debut press conference as worries about the country’s future policy direction soared with the introduction of a new cabinet loyal to leader Xi Jinping.

Li Qiang, Xi’s longtime aide, officially replaced Li Keqiang as prime minister over the weekend. It is tasked with reviving the world’s second-largest economy after three years of Covid lockdowns and as tensions escalate between the US and China in various areas, including technology and business.

In his first press conference as the country’s No. 2 official, he sought to ignite the private sector, a group that has suffered under years of repressive regime and is increasingly concerned about Beijing’s increasingly statist approach.

“For a certain period of time last year, there were inappropriate discussions and comments in the public, which caused concern among some private entrepreneurs,” Li said on Monday.

“From a new starting point, we will create a market-based, legalized and internationalized business environment, treat enterprises of all forms of ownership equally, protect the property rights of enterprises and the rights and interests of entrepreneurs.”

The new government will “promote fair competition among various business entities, and support the development and growth of private enterprises,” he added.

But Li also tried to temper expectations, admitting that China’s goal of achieving 5 percent GDP growth this year – the lowest target in decades – was “not an easy task.”

His comments came a day after Beijing made a surprise decision not to fire the incumbent central bank governor, which was welcomed by analysts who said it would “bolster” investor confidence.

no decoupling

Li made it clear that Beijing does not want to secede from the United States.

“The Chinese and American economies have benefited from each other’s development,” he said. “China and the US can and should cooperate, and there is great potential for Sino-US cooperation.”

“Opening up to the outside world is our core national policy. No matter how the external situation changes, we will steadily move forward,” he added. Worries about China’s future direction have been growing since October, when Xi assembled his top team of loyalists in an unprecedented move since the Mao era.

Over the weekend, the new composition of the cabinet of ministers was approved by the Chinese parliament. When a group of Xi’s close associates took office, some Western-educated and reform-minded officials left, including former Prime Minister Li Keqiang and former Vice Premier Liu He.

Analysts worry that Xi’s preference for personal loyalty over technocratic competence is indicative of a more ideological political direction that could further undermine private sector growth and worsen Beijing’s ties to Washington.

The worsening economic outlook appears to have prompted top management to take a more conciliatory tone towards private business, which accounts for more than 60% of China’s GDP and more than 80% of employment, despite being smaller than the public sector.

Xi called last week private firms play a role in spurring growth, jobs and technical innovation.

“We always treat private enterprises and private entrepreneurs as people on our side,” he said.

Saving the technocrats

In a surprise announcement on Sunday, Beijing decided to retain some of its existing economic leadership, including People’s Bank of China Governor Yi Gang, a US-educated economist.

The Chinese economy is facing a growing number of challenges. The key housing market is experiencing its worst downturn on record. Consumer spending is sluggish. Youth unemployment remains high.

Business confidence has plummeted following unprecedented regulatory pressure on private companies. Relations between the United States and China are at their lowest point in decades, leading to escalating technology and investment tensions. Foreign investment in China has declined sharply.

“The reappointment of some senior financial and economic officials, including the head of the People’s Bank of China Yi Gan, as well as the ministers of finance and trade, shows the continuity and consistency of policies under financial regulatory reform,” said Ken Chung, chief Asian currency strategist at Mizuho bank. .

He added that the move should help boost foreign investors’ confidence in China’s investment prospects.

Analysts at Goldman Sachs say the deal reflects China’s focus on “stability” as new government leaders seek to restructure financial regulation.

Beijing announced a major government reform last Tuesday that will change the oversight of its financial system and aim to increase technological self-sufficiency. The changes to the State Council, including the creation of a powerful financial regulator, are the biggest in recent years and are expected to strengthen the party’s control at the government’s expense.

The-CNN-Wire
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Martha Zhou of CNN contributed to the article.

Message China’s new premier is trying to reassure the private sector amid widespread fears about the future, first seen on KION546.

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