China’s premier Li Keqiang painted a bleak image of economic growth in the second quarter, warning that the country could struggle to record a positive figure.
An economist by training and the premier of the State Council – China’s top administrative body – Li Keqiang issued a stark warning about China’s struggle to achieve positive growth this quarter, citing various issues such as unemployment and slow business reopening.
He also noted that power generation, freight transport and new bank loans all fell in the first half of May.
«We will try to make sure the economy grows in the second quarter,» according to a «Financial Times» report citing a transcript by Li. «This is not a high target and a far cry from our 5.5 percent goal. But we have to do so.»
Youth Unemployment
According to Li, unemployment was rising in the nation with those aged 16 to 24 reaching a historic high of 18.2 percent.
Migrant worker unemployment in China was also rising sharply.
Food Security
Li also underlined risks in food security with grain output «barely» matching demand.
He warned of «huge problems» if the summer grain harvest was poor.
Business Reopening
Given the economic challenges, Li urged Chinese officials to accelerate reopening and resume production, citing a 23 percent year-on-year surge in corporate liquidation in April, largely amongst private small and medium-sized enterprises.
«Progress is not satisfactory,» he said. «Some provinces are reporting that only 30 percent of businesses have reopened [ ….] The ratio must be raised to 80 percent within a short period of time.»
Self Reliance
Despite the pressures, Li stressed that local governments will need to be less dependent on Beijing and more self-reliant.
«I am here to let you know my bottom line. There is a reserve fund managed by the premier,» Li said, without specifying the size of the fund. «Other than that, local governments must raise funds [on your own].»
Slowing Growth
A 6.9 percent economic contraction in the first quarter of 2020 was the last time China reported a GDP decrease, following a more than 30-year growth streak.
In the first quarter of 2022, China registered 4.8 percent annual GDP growth.
Although Li did not mention president Xi Jinping's zero-Covid policy, he noted that it was critical that «the smooth functioning of supply chains and Covid prevention are both achieved».
