——Will Li Keqiang’s tactics before his abdication work?
[The Epoch Times, April 14, 2022](Reported by Epoch Times reporters Ning Haizhong and Luo Ya) The epidemic situation in China is escalating, and the authorities insist on clearing the situation and wantonly shut down the city. Chinese Premier Li Keqiang issued three warnings of economic growth risks in a week and proposed some measures. Experts believe that China’s economy is empty, and Li Keqiang’s tricks are useless.
According to CCTV, Li Keqiang hosted a symposium on the economic situation of some local governments in Jiangxi on the 11th. Li Keqiang reiterated several “stability”, including “stabilizing the word, seeking progress while maintaining stability”, “stabilizing the fundamentals of the economy”, “stabilizing employment and prices”, etc., and also stressed that “the sense of urgency should be strengthened.”
He proposed that the implementation of policies such as tax rebates, tax reductions and fee reductions, financial support for the real economy, the issuance and use of special bonds, the start of construction of key projects, and support for enterprises to stabilize jobs should be arranged ahead of time and the pace should be accelerated. Do a good job in spring ploughing production, ensure the supply and price of agricultural materials, ensure the stable supply of energy such as electricity and coal, ensure the orderly operation of transportation backbone networks and ports, smooth international and domestic logistics, and maintain the stability of the industrial chain and supply chain.
According to reports, from the 11th to the 12th, Li Keqiang came to the Nanchang Cross-border E-commerce Venture Park to talk with entrepreneurs, and some companies reported that their cash flow was tight. Li Keqiang also went to Dingjia Village to inspect rice transplanting, and also inspected Geely New Energy Commercial Vehicle Company.
On the 8th, Li Keqiang presided over a symposium of economic situation experts and entrepreneurs, mentioning that “some unexpected factors exceed expectations, bringing greater uncertainty and challenges to the smooth operation of the economy”, and he also said that “the main lines of transportation and ports must be guaranteed.” and other backbone networks to operate in an orderly manner”, research and support “consumers who have difficulty in repaying loans affected by the epidemic”, “stabilize foreign trade and foreign investment”, etc.
On the 6th, Li Keqiang said when presiding over an executive meeting of the State Council, “the complexity and uncertainty of the domestic and foreign environment have increased”, “some exceeded expectations” and “new downward pressure has further increased.”
Harsh clearing measures hit China’s economy
The CCP authorities have taken stringent measures to control the epidemic. The largest city, Shanghai, has been closed for two weeks and has not been substantially relaxed. Apart from secondary disasters in people’s livelihood, the negative impact on China’s economy has initially appeared.
Data released on April 6 showed that the Caixin service industry (PMI) fell to 42 in March from 50.2 in February, the lowest since March 2020, indicating that service industry activity has contracted again, and the rate of contraction is significant.
Manufacturing activity in China also fell to a two-year low of 48.1 in March, the Caixin Purchasing Managers’ Index released on April 1 showed.
PMI is seen as an economy’s “medical checklist”. The PMI line of prosperity and decline is 50. Above 50 means expansion and development, and below 50 means recession.
According to official CCP data, Shanghai contributes 3.8% to China’s GDP. There are other parts of the country locked down, including the manufacturing base of Changchun in the northeast, and the southern metropolis of Guangzhou is also imposing a series of restrictions.
Li Keqiang mentioned the need to unblock international and domestic logistics and maintain the stability of the industrial chain and supply chain. However, after Shanghai closed the city, the congestion situation of Shanghai Port, China’s largest port, has worsened. Shanghai Customs reported on the evening of April 12 that local epidemic control measures have restricted the port’s collection and distribution capacity. Since the end of March, more than 50% of the goods at the Shanghai port have not been picked up after the customs have released them, of which the actual pick-up and departure ratio at the sea port is only 35%. %, and the air port is 49.1%, resulting in a large backlog of goods at the port and the warehouse of the cargo terminal, and the normal operation of the sea and air ports is hindered.
According to the Central News Agency, many provinces and cities such as Jiangsu, Zhejiang, and Shandong have closed Lianwai expressways or provincial roads in order to prevent the epidemic, which has paralyzed logistics in large areas, trapped at least tens of millions of drivers, and affected more than a quarter of China’s third of the freight volume. Some drivers filmed a video to complain and ask for help, saying that they had been trapped in the car for several days, crying.
Does Li Keqiang’s push for large infrastructure to save the economy work?
Li Keqiang mentioned that it is necessary to do a good job in the implementation of the issuance and use of special bonds and the construction of key projects.
Faced with a sluggish property market and lockdowns due to the outbreak, Beijing has pinned its hopes on infrastructure this year to help boost the economy. Statistics released by the Chinese Communist Party’s Bureau of Statistics on April 4 showed that infrastructure investment in January and February this year increased by 8.1 percent year-on-year. As of April 7, at least 20 provinces and cities in China have announced the commencement of major projects involving a total investment of more than 9 trillion yuan.
Local governments plan to invest at least 14.8 trillion yuan ($2.3 trillion) in “major projects” this year, according to Bloomberg calculations.
The Chinese government issued all special bonds to the provinces for infrastructure investment. “We will hurry up to match newly approved quotas with eligible projects,” Xu Hongcai, vice minister of finance, said at a recent news conference. “We will ensure that special bond proceeds are used to significantly boost investment.”
Albert Song, a political and economic researcher at Tianjun with 27 years of experience in China’s financial industry, told The Epoch Times that China’s infrastructure is basically saturated, and it is difficult to increase investment in infrastructure to achieve the desired effect of stimulating the economy.
Song Weijun said: “In 2008, the CCP issued a stimulus plan worth 4 trillion yuan (about 640 billion U.S. dollars), mainly for infrastructure construction, but it was not completed that year. Trillion yuan (about 4.8 trillion US dollars). At that time, the impact of the global economic and financial crisis was great, and the large investment kept the Chinese economy. The local government thought this was a good method. Airports’ – railways, highways and airports. As a result, many highways have no cars, the throughput of airports is very low, and even commercial complexes in some cities have no businesses and people flow, and the marginal utility is constantly diminishing, so it is difficult to maintain.”
Xia Yeliang, a former professor at the School of Economics at Peking University, told The Epoch Times that Li Keqiang is now a dead horse and a living horse doctor, and some measures must be taken. “He is at odds with Xi Jinping. I think the whole world knows about their relationship. The prime minister will be replaced in March next year, so he is trying to do some remedial work now, but Xi Jinping doesn’t necessarily buy his account, so he can’t do some things. “
Li Keqiang confirmed at a press conference last month at the Chinese Communist Party’s Two Sessions that this year is the last year of his term as prime minister. He said that China is still facing a complex and severe situation. But he immediately claimed that under the leadership of Xi Jinping, China’s economy will be able to “climb over the hurdles”.
Some readers left a message on the Epoch Times website saying that Li Keqiang seemed to be throwing the blame ahead of schedule.
Analysis: China’s economy is empty and the city closure will bring the economy down
Given the significant disruption to business operations caused by the CCP’s blockade, the European Union Chamber of Commerce in China recently sent a letter to the Chinese State Council and Vice Premier Hu Chunhua, explaining how China’s containment measures to control the epidemic have disrupted European companies’ operations in China, and have resulted in semi-paralysis of logistics and production. However, the Chinese Ministry of Foreign Affairs responded on the 12th that “any prevention and control measures will have some costs.”
According to Bloomberg, China is cutting LNG purchases as soaring global prices exacerbate import losses while pandemic lockdowns dampen domestic demand. First-quarter imports fell 14% from a year earlier, according to shipping data.
Shanghai, Kunshan and other major towns of Taiwanese businessmen have implemented zoning and control, and also cracked down on the iphone and other electronics industries. Tianfeng International Securities analyst Ming-Chi Kuo recently posted an analysis on Twitter that the Pegatron Shanghai and Kunshan plants, the second largest iPhone assembly plants, have been suspended, and are expected to resume work from the end of April to early May at the earliest.
However, it has not yet been determined whether the lockdown period will be extended.
As the cities where Shanghai, Changchun, Shenyang and other major automobile production bases are located have begun to “completely stand still”, car companies have shut down factories in large areas, and the supply chain has almost been paralyzed. NIO, a well-known electric vehicle company in mainland China, announced on April 9 that it would suspend vehicle production and delay deliveries. Tesla’s Shanghai Gigafactory has also been shut down for nearly 20 days, which has a huge impact on its global deliveries.
In addition, it has a serious impact on farming. Spring is the most important season for planting. The strict zero-clearing policy implemented by the Chinese authorities has further exacerbated the shortage of fertilizer, labor and seeds.
The British “Financial Times” reported on the 6th that official data showed that as many as one-third of farmers in Jilin, Liaoning and Heilongjiang provinces did not have enough seeds, seedlings, fertilizers and other raw materials to produce agricultural products. These three provinces account for more than 20% of China’s overall grain production.
Xia Yeliang said that the CCP was bragging, saying that it was the first in the world to get out of the epidemic, and China’s economy recovered quickly, but you look at the recent situation, the epidemic in China has re-emerged, and the CCP requires the dynamic to return to zero. But the current virus is not so severe, it is equivalent to a severe cold, but the CCP always wants to control everyone. Shanghai’s economy accounts for a very large proportion of China. Besides Shanghai, other cities are also strictly controlled. If you keep it closed like this, you will ruin your own economy.
Xia Yeliang said, “In fact, China’s economy is empty now, and the employment problem has always been very serious. In the past, when it came to employment, a very large part was the foreign trade processing industry. There are many industries related to foreign trade. China is a big exporter and a big manufacturing country. China The economy’s dependence on foreign trade is as high as 30 percent. At present, the relationship with Western countries cannot be improved in terms of trade. In this case, China only relies on internal circulation and domestic consumption. “
But the slump in home sales in China has intensified, with auto sales in China down 11.7% in March from a year earlier, and domestic sales of excavators, a leading indicator of construction, slumped nearly 64%.
Xia Yeliang said: “Looking at China’s real estate market and stock market now, there is no hope. The real economy will always engage in this set of plans and anti-marketing behaviors. I call it anti-marketing.”
Responsible editor: Lin Congwen#