Premier Li keeps economy on course
- By Shastri Ramachandaran
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E-mail China.org.cn, December 22, 2016
Chinese Premier Li Keqiang – whose economic policies had once given rise, in Western media and academia, to the term "Likonomics" – is, perhaps, the most-watched head of the government today. The reason is that China's economy and economic health can, in large measure, determine the world's economic health; and, the state of China's markets set the tone for other markets.
The reason is that China is the world's largest developing economy and also the world's second largest economy. The China-U.S. economic relationship is the world's most important one with consequences for the U.S., China as well as developed and developing countries. And, Premier Li is the man steering the Chinese economy.
Although China owes its economic achievements to the overall decisions of the Communist Party of China and its Central Committee headed by General Secretary Xi Jinping, Premier Li, on behalf of the State Council, is the steersman. He is responsible for building the economic policy framework and is its implementer-in-chief. Hence, the economic policies and performance of the government have come to be identified with him.
Since he assumed office as Premier in 2013 and throughout 2016, Li's emphasis has been on sustaining the reforms and opening-up. In 2016, in every policy articulation at home and abroad, he has been driving home the message that it is reform that can yield policy dividends for the Chinese economy. Li is also a strong proponent of relying on market mechanisms, which his policies further advanced in the current year.
2016 is the first year of China's 13th Five-Year Plan for Economic and Social Development. Li presented the draft at the Fourth Session of the Twelfth National People's Congress on March 5 and it was adopted on March 16, 2016.
Briefing the Fourth Session on the main targets, tasks, and measures over the next five years, Li said the Plan's goal is to complete the building of a "moderately prosperous society" in all respects by 2020. It is designed to address serious issues such as unbalanced, uncoordinated, and unsustainable development; and, stresses the need to promote innovative, coordinated, green, open, and shared development. He spelled out the development policies, initiatives, and projects; and the six focus areas in the draft.
In the succeeding months, Li followed up the briefing with a series of instructions on reforming state-owned enterprises. To bring state-owned enterprises back to health, he ensured that steps were initiated to make them leaner, weed out unprofitable capacity, and unleash market forces.
In the aftermath of Brexit, with a view to boosting investor confidence, Li announced that China will not devalue the yuan for short-term advantage. He convinced investors to view China with a "calm and cool head" at a time of global uncertainty, and showed that Beijing can handle the problems – such as the slow down, excess capacity and glut of capital goods – facing its economy.
In the first six months, Li kept the economy "basically stable" and on course to meet its major yearly targets. The second-quarter growth rate was close to the first quarter's 6.7 percent.
His speech in the United Nations General Assembly in September was a reflection of China's economic policies being pursued in its external affairs, too. He warned against the rise of protectionism and assured that China will continue with its opening-up policy.
In New York, Li assured that China will remain open to overseas investment and global trade. "Our door (of opening-up) will only open wider. We are resolute and steadfast in adhering to this development path," he said. This was significant in the context of Brexit and the then rising rhetoric against free trade led by the Republican presidential nominee, Donald Trump.
The result of his policies are evident in China's economy performing better than expected in the third quarter and its debt risks being kept under control. Officially announcing these last month, Li said in Macao on October 11: "China's economy in the third quarter not only extended growth momentum in the first half but showed many positive changes."
According to a Reuters report, key economic indicators such as factory output, profits and investment, have rebounded, he said. More than 10 million new urban jobs were created in the first nine months, with the survey-based jobless rate falling below 5 percent in September, he said, while adding the economy still faces downward pressure.
The report quoted Li as saying that China will be able to achieve its main economic targets this year and maintain medium- to high-speed growth.
Shastri Ramachandaran is a columnist with China.org.cn. For more information please visit:
http://www.china.org.cn/opinion/ShastriRamachandaran.htm
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