Preserve economic growth in the second quarter... China has become urgent

[사진=신화통신]

As the dark clouds in the economy are getting thicker due to the corona lockdown in China, it is showing an urgent look. Premier Li Keqiang, who is the head of China’s economy, recently held an emergency meeting with local governments and ministries across the country to directly instruct them to keep pace with the economic growth rate in the second quarter of this year.

On the 25th, according to the Stock Times, the Chinese stock media, Chinese Premier Li Keqiang held an online emergency meeting with local government officials on the same day and said, “China’s economic indicators have slowed significantly, and in some areas and problems, it has become worse than in 2020, when the initial outbreak of Corona 19.” He said, “We need to wage an all-out war to secure a reasonable growth rate in the second quarter.”

Prime Minister Li said, “We will prioritize growth stabilization and focus on protecting market participants, employment and people’s livelihood. The detailed plan of the recently announced economic stabilization policy should be released by the end of May by basically implementing it and increasing the intensity of its implementation.” Earlier on the 23rd, the State Council of China decided to implement 33 measures in six areas, including fiscal and monetary and supply chain stabilization, to stabilize the economy at a standing meeting presided over by Premier Li Keqiang on the same day.

In addition, he urged each department and province to achieve reasonable economic growth and reduce the unemployment rate, while also sending a special audit team to 12 provinces on the 26th to audit whether government policies are being properly implemented. In addition, with respect to key economic indicators for the second quarter of each region, the National Bureau of Statistics will accurately disclose them in accordance with regulations, and the State Council will notify the relevant business situation, he added.

On this day, Prime Minister Lee did not mention the zero-corona policy, but repeatedly emphasized the importance of quarantine. As he oversees quarantine and economic development, he also ordered that economic stability be given priority, the Financial Times (FT) reported.

In addition to Prime Minister Lee, the meeting was attended by the Politburo Standing Member and Deputy Prime Minister. It is reported that more than 100,000 people from all over the country attended, as well as high-ranking leaders such as Deputy Prime Minister Sun Chun-ran, Deputy Prime Minister Hu Chun-hua, and Deputy Prime Minister Liu He. This is the largest since the meeting (170,000 people) on February 23, 2020, when the COVID-19 outbreak occurred, the Global Times reported.

This shows that the economic situation in China is not good. China’s major indicators for April have already confirmed the extreme economic downturn. Specifically, the growth rates of retail sales and industrial production in China in April recorded -11.1% and -2.9%, respectively, the worst level since the early days of the Wuhan outbreak in 2020, when the COVID-19 outbreak began. The urban unemployment rate also rose to 6.1% from 5.8% in the previous month, significantly exceeding the upper limit of this year’s management target set by the Chinese government (5.5%).

Although the Chinese government has revealed a sense of crisis in its economic situation and is issuing various additional stimulus measures, there are observations that it will be difficult to change the slowdown in the Chinese economy as it is still adhering to the ‘zero corona’ containment policy that is weighing on the Chinese economy. Global investment banks (IBs) also lowered their growth forecasts for this year one after another, fearing that downward pressure on the Chinese economy would increase due to the COVID-19 quarantine measures.

Citing an economist at Goldman Sachs, Bloomberg said, “Prime Minister Lee’s emphasis on ‘growth in the second quarter’ may be an ‘tacit acknowledgment’ that the ‘around 5.5% growth target’ presented in early March is being challenged.” “China’s policymakers are urgently required to come up with additional stimulus measures, given very weak economic growth in April, a sluggish recovery in May and the continued rise in the unemployment rate,” economists said.