[NTD News November 24, 2021, Beijing time]Chinese Premier Li Keqiang, who is in charge of the economy, warned twice in a week, frankly saying that China’s economy is facing new downward pressure and challenges are intertwined and exceed expectations.
Li Keqiang warned twice in a week
On November 22, Li Keqiang hosted a symposium for some local government officials in Shanghai, saying that unstable factors in the domestic and international environment have increased and the economy is facing new downward pressure.
Li Keqiang said that since the beginning of this year, China’s economic development has encountered new challenges that have intertwined and exceeded expectations, including rising commodity prices, tight electricity and coal supplies, and severe floods.
He also said that unstable and uncertain factors in the domestic and international environment have increased, and the Chinese economy is facing new downward pressure. He asked to continue to do a good job of normalizing the epidemic prevention and control, and prevent and defuse risks.
Li Keqiang proposed that to withstand the downward pressure of the economy, we must work hard on reform and opening up, attract foreign investment, and integrate and stabilize the international industrial chain supply chain.
However, the third historical resolution issued by the Sixth Plenary Session of the Communist Party of China is considered to have denied reform and opening up. Xi Jinping advocated “common prosperity” and strengthened the control of private enterprises, which is considered to be approaching the Mao Zedong era, which was closed and closed. This seems to run counter to the reform and opening up that Li Keqiang has repeatedly advocated.
It is worth mentioning that Li Keqiang’s speech in Shanghai was a warning to China’s economic challenges twice in a week.
On the 19th, Li Keqiang hosted a symposium of economic situation experts and entrepreneurs in Beijing. He said frankly at the meeting that China’s economy is facing many challenges to the smooth operation of the economy and that it is necessary to promote the economy to “climb over the hurdles.”
He also said that targeted measures should be taken to strengthen economic operation adjustments to ease the pressure on the transmission of bulk commodity prices to downstream small, medium and micro enterprises.
At the same time, he also mentioned deepening and expanding international cooperation, playing the role of open platforms such as pilot free trade zones, and making greater efforts to attract foreign investment.
Since the beginning of this year, China’s economy has experienced a cliff-like decline, which has attracted international attention. According to data released by the Statistics Bureau of the Communist Party of China, the first quarter of this year increased by 18.3% year-on-year, the second quarter was 7.9%, and the third quarter only increased by 4.9%.
Mainland economic experts have warned that exports, consumption, and investment of the three carriages that drive China’s economy have slowed down, indicating that China’s economy has entered a period of recession.
Foreign trade exporters are the backbone of China’s economy, but Ren Hongbin, Vice Minister of Commerce of the Communist Party of China, said at a press conference on the 24th that there are many hidden worries in the development of foreign trade. The phenomenon of not daring to accept “increasing income without increasing profits” is more common.
He said that the Ministry of Commerce will work with relevant departments to introduce a new round of “stabilizing foreign trade” policies and measures in due course to ensure that foreign trade runs within a reasonable range.
The CCP’s local debt is nearly 30 trillion yuan
At the same time, China’s huge debt has made the outside world uneasy. According to data from the Ministry of Finance of the Communist Party of China on November 23, from January to October 2021, the Communist Party of China issued 6,491.6 billion yuan (RMB, the same below) of local government bonds, which is higher than the 6.44 trillion yuan in the whole year of last year and a record high.
As of the end of October 2021, the CCP’s local government debt balance is close to 30 trillion.
According to Goldman Sachs’ estimates, the hidden debt of the Chinese Communist Party’s local governments is as high as 53 trillion yuan, equivalent to 52% of China’s annual gross national product (GDP).
Goldman Sachs research found that about 60% of the amount raised by Chinese local financing platforms issued bonds is used to repay debts that are due, rather than for new investment. In other words, Chinese local governments are borrowing new debts to repay old debts, and the snowball of debts is getting bigger and bigger, a vicious circle.
On October 5 this year, China Databank and Tencent Finance jointly launched the “City Debt Ratio Ranking”. Among the 86 cities in China’s first-tier, new first-tier, second-tier, and provincial capitals, 75 cities have debt ratios higher than in 2019. The debt ratio of 85 cities exceeds 100%.
The top ten cities have debt ratios exceeding 500%. Among them, Guiyang, Guizhou, topped the list, with a debt ratio of 929%. Economists have warned that China’s huge debt has long become a “gray rhino” that will lead to the collapse of China’s economy.
(Reporter Luo Tingting Comprehensive Report / Chief Editor: Wen Hui)
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