Li Qiang: Three signs and three problems for China’s new premier 23 days into office – BBC News 中文

The first signal is that as the new prime minister, Li Qiang has continued the trajectory of his predecessor Li Keqiang in many policies. For example, he presided over an executive meeting of the State Council on March 24. A series of temporary tax and fee reduction policies introduced by Li Keqiang when he was in office were confirmed at this meeting to continue, including halving the collection of bulk commodity storage land for logistics companies in cities and towns. Land use tax policy, policy of reducing the employment security fund for the disabled, policy of reducing the income tax policy of small and micro enterprises and individual industrial and commercial households whose annual taxable income does not exceed 1 million yuan, policy of reducing unemployment and work-related injury insurance premium rates, etc.

At the Boao Forum on March 30, Li Qiang said, “We will effectively prevent and resolve major risks, especially maintain the overall stability of my country’s financial operations, and firmly hold the bottom line of no systemic risks.” After taking office, he was very sensitive to “risk prevention”. The “no stimulus measures” and “deleveraging” in “Li Keqiang’s economics” all mean this. At present, it seems that Li Qiang has no plans to change these directions.

The second signal is that Li Qiang mentioned cooperation in new fields such as digital economy and green economy in many diplomatic talks. For example, on March 29, I met with Côte d’Ivoire’s Prime Minister Asch, on March 31, I met with Spanish Prime Minister Sanchez, on April 1, I met with Malaysian Prime Minister Anwar, and on April 2, I met with Japanese Foreign Minister Lin Fangzheng. As a new engine for cooperation between the two parties.

Especially in the meeting with Singaporean Prime Minister Lee Hsien Loong on April 1, it was stated in more detail that the two countries should tap new potentials for cooperation in the fields of digital economy, artificial intelligence, e-commerce, etc., and build talent training exchanges, technology business incubation, joint research and development, The “full chain” cooperation model for industrial landing.

In the past 23 days, Li Qiang went to Hunan and Hainan provinces for investigation. In Hunan, the theme of his research was advanced manufacturing, and he visited CRRC Zhuzhou Electric Locomotive, Changsha BYD Auto, Lens Technology and other companies.

During the investigation, Li Qiang said, “The real economy, especially the manufacturing industry, is the foundation of my country’s economy. With the complex and profound changes in the domestic and foreign situation, the development of my country’s manufacturing industry is facing an important juncture. Our determination to stick to the manufacturing industry cannot be shaken. The strength of the manufacturing industry must be increased.” This seems to be related to the timing of his position – when he took office, the trend of “decoupling” between China and the West in high-end manufacturing such as chips became more and more obvious, while the country continued to transform and develop Higher quality economy to get out of the “middle income trap”.

The third feature is that it will be further open to foreign investors. Among the 15 events, 5 meetings with foreign dignitaries, 4 meetings with representatives of foreign entrepreneurs or institutions, a speech at an international forum (Boao), and research on the construction of a free trade port in Hainan accounted for the vast majority of his public activities. On these occasions, he basically advocated for foreign capital around two themes: China’s development has injected great certainty into the uncertain world economy; China will optimize the business environment and further liberalize market access.

With only 23 days of public activities, it is still difficult to fully observe Li Qiang’s governance thinking, but the outside world generally believes that he urgently needs to face the following issues.

The first is to rebuild the confidence of private enterprises. In the past few years, China’s private enterprises have experienced rare blows-the education and training industry has been “one size fits all”; Internet giants have been interviewed, delisted, fined, and split; real estate companies have stepped on the “three red lines” and their debts Breach of contract, on the verge of bankruptcy, leaving a “unfinished building”. In the past few days, the news of Jack Ma’s return to China has dominated the headlines of many media, because the market needs such a symbolic appearance to create an atmosphere of “fighting the economy”. Of course, it also reflects the lack of confidence of private enterprises.

And Li Qiang is considered to have “private enterprise genes”. For example, he said at the Prime Minister’s press conference that “there are some incorrect comments in the society, which make some private entrepreneurs feel worried.” He also said, “I have long worked in places where the private economy is relatively developed,” which means that he once held power in Zhejiang, and Wenzhou, where he was born, is also known as China’s “hometown of private enterprises.”

The second pressing issue is attracting foreign capital. In the past 20 years or so, China has always been a place for foreign investors to seek gold, whether it is a production base or a consumer market. However, China’s strict “clearing” policy under the epidemic has discouraged foreign investors. A week ago, Michael Hart, president of the American Chamber of Commerce in China (AmCham China), said that the attitude of American companies towards doing business in China is “more negative than it has been in a long time”. But the reason he gave was that tensions between the U.S. and China continued to escalate, “making business very challenging.”

According to the latest annual survey of more than 900 member companies of the American Chamber of Commerce in China, 55% of the majority of companies no longer regard China as one of the top three investment priorities. This is the first time this situation has appeared since the survey. Last year, the number of companies citing “uncertainty in bilateral relations” as their main challenge in China rose by 10 percentage points to 66%. At the same time, the number of companies that think China is less welcoming to foreign companies also increased to 49%.

Su Yue, chief China economist at the Economist Intelligence Unit (EIU), said Li Qiang was trying to reassure private companies and foreign investors that the Chinese government would insist on developing private companies and welcoming foreign investment. But “even if Li Qiang emerges as a pro-business premier with a solid track record in Zhejiang and Shanghai, the lack of institutionalized measures means confidence won’t return immediately.”

The third is to help China overcome the so-called “middle income trap”. After the reform and opening up, China took advantage of the demographic dividend to develop a large-scale low-level manufacturing industry, coupled with a large amount of infrastructure construction, and the economic aggregate continued to rise. However, these “low-hanging fruits” have been picked, and industrial upgrading must be carried out , Replace high-polluting, low-efficiency old industries with new industries with higher added value and higher efficiency. Currently facing China is the middle-income trap, and whether it can overcome it has become one of the motifs of the Chinese economy.

It is worth mentioning that although Li Qiang’s response to the new crown epidemic during his tenure in Shanghai was criticized by the public, he was also praised for introducing electric car giant Tesla with extraordinary measures and extraordinary speed. Some people believe that this is similar to the introduction of the iPhone mobile phone production chain back then. By introducing a giant, it is expected to drive the entire industrial chain and eventually revitalize the entire smartphone industry. Electric vehicles are expected to be highly anticipated in China’s industrial upgrading.

After sorting out the three major tasks facing Li Qiang, the paradox behind it also emerged-on the one hand, he has a very deep history with Xi Jinping (he was the Secretary-General in Zhejiang), but on the other hand, in the past few years, China’s education, Internet, Strong supervision in real estate and other fields has made private enterprises tremble, and the external toughness has made foreign capital worried. To what extent can his propaganda and even promises to foreign capital and private enterprises be implemented?

The mainstream view is that it will be difficult for Li Qiang, as Xi Jinping’s “close minister”, to have his own opinions and original ideas. However, opponents can also say that the personal relationship between the first and second leaders can actually help the prime minister to achieve greater achievements, such as Jiang Zemin and Zhu Rongji 30 years ago. “Crossing the river by feeling the stones”. Now that Li Qiang is facing larger and more complicated economic problems, it is worth observing to what extent he can get Xi Jinping’s support.

Under China’s “party-government system”, the Party Central Committee is more responsible for top-level design, ideology, propaganda, military affairs, etc., and the Premier of the State Council has to deal with the minutiae of economic and social governance, especially in China’s “economic construction as the center” in the past two decades Under the policy, the role played by the Prime Minister in the economic field cannot be underestimated.

From a legal point of view, after the founding of the Communist Party of China, the 1954 Constitution stipulated that the President of the State had real power and had the right to hold the Supreme State Council; in the 1982 Constitution, the State President became a vacant post, and administrative power was completely transferred to the State Council, implementing the Prime Minister responsibility system.

In the era of former Premier Zhu Rongji, this system was particularly effective. In all aspects of China’s economic reform, from the reform of state-owned enterprises to the reform of real estate and the entry into the WTO, it has been clearly branded as a “premier”.

However, after Xi Jinping came to power, reform matters were no longer led by the premier, but many “leading groups” across multiple departments were established, and more government-led issues were specifically arranged in the name of the Central Committee of the Communist Party of China; “The subtext is “weakening the role of the prime minister”. During the Deng Xiaoping era, the “separation of the party and the government” was proposed. When it came to the “two sessions” in 2017, Wang Qishan specifically corrected it as “the division of labor between the party and the government.”

But even so, the importance of the Chinese prime minister is still stronger than that of the false prime ministers of some countries, such as the French prime minister and the Russian prime minister.

From the perspective of China’s system design, there are three points worth noting in the scope of powers of Premier Li Qiang:

Precisely because the new prime minister is likely to play a huge role in social and economic governance, when Li Qiang took office, the outside world began to speculate whether there would be “Li Qiang economics”?

This pattern of adding “economics” to a leader’s name generally refers to the economic policies implemented by a political figure. “So-and-so economics” does not mean that a certain political figure has created a new school of economics, but often refers to the implementation of unique economic policies.

This usage first appeared in the “Reaganomics” of US President Ronald Reagan in the 1980s. Reagan established a “small government”, reduced spending, lowered taxes, and did not engage in wealth redistribution. Although the rich will become richer because of this, they will increase consumption and investment, and wealth will seep from top to bottom, eventually making all classes benefit. Therefore, it is also known as the “trickle-down theory”.

From Reagan to Obama are seen as neoliberals, a firm believer in a market-oriented economy. It wasn’t until after Biden came to power that this changed structurally. “Bidenomics” is a full-scale rebellion against “Reagan economics”. He not only criticized the “leakage theory” in the budget that has never worked, but also established “big government” and focused on economic planning. Income redistribution in order to promote long-term economic growth.

A well-known example in Asia is “Abenomics”. The then Prime Minister of Japan, Shinzo Abe, hoped that the three arrows of “large-scale quantitative easing, fiscal expansion, and promotion of private investment” would break the country’s economic “lost for two decades”. “Severe illness. After Abe was assassinated and died last year, the outside world sorted out his political legacy, and almost all of them could not avoid “Abenomics”.

In China, the first Chinese prime minister to receive such treatment was Li Keqiang. Three months after he took office in 2013, Barclays Capital proposed “Li Keqiang economics” (Likonomics) in a report, the core of which has similarities with Reagan economics, including “no stimulus measures”, “deleveraging globalization” and “structural reforms”. In the ensuing ten years, his ruling ideas were indeed advanced according to these three points.

It is worth mentioning that when Li Keqiang was still in charge of Liaoning in 2007, he often used three indicators of electricity consumption, railway freight volume and bank loan issuance to conduct a physical examination of the economy. In 2010, The Economist believed that these three indicators were more reliable evaluation indicators than GDP, and named them “Keqiang Index”. Citibank even refined the proportions of the three indicators and officially used them as research basis .