The economic situation in China is very worrying because of the Covid-19 pandemic: this admission is made by Prime Minister Li Keqiang, the second figure in the state behind President Xi Jinping. He made this observation during a gigantic teleconference, Thursday, May 26, with tens of thousands of local Communist Party officials.
The words are strong: “It’s a critical moment”, says Li Keqiang. And he details: “Employment, industrial production, electricity consumption, freight transport… Everything is down sharply.” The picture is so dark that it has been partly censored on social networks and especially by the official Chinese press, which emphasizes the positive aspect: mobilization to stabilize and revive the economy.
In fact, Li Keqiang is saying out loud what the Chinese are seeing in everyday life. The official growth target of 5.5% this year will never be met. It will be 4% at most, experts estimate. Unemployment exceeded 6%, close to its absolute record, and this is only the official figure, which does not take into account, for example, migrant workers from the countryside. Consumption plunges: -11% over one year for retail sales, minus 36% for car sales. Real estate investments are also down. The business climate is bad.
Li Keqiang is a discreet figure, much less publicized than President Xi Jinping, but he is an essential cog in Chinese power. The 66-year-old has served as prime minister for nine years and oversees economic policy. In this opaque universe of Chinese power, he has the reputation of being more moderate than the very authoritarian Xi Jinping.
Anyway, Li Keqiang announced two months ago that he was about to leave his post: “This is the last year of my mandate as Prime Minister”, he had dropped in March in front of the press, delivering there also an unusual confession. In other words, Li Keqiang does not have much to lose by making his little music heard and standing out from the official line a little. Stressing, as he did on May 26, that the situation is even more difficult than at the start of the pandemic, he issues a thinly veiled criticism that today’s slowdown is due to the essential to the “zero Covid-19” strategy. This strategy brings a large part of the country to a standstill, in particular Shanghai and Beijing. This strategy is Xi Jinping’s dogma.
Does this mean that the Chinese president is criticized, even threatened? We are not quite there but it is a sign that within the Chinese Communist Party this strategy makes people cringe. It is inevitable: power derives most of its legitimacy from the country’s economic performance, the steady increase in purchasing power, the rise of the middle classes and the reduction in poverty. The obsession with Zero Covid puts a stop to all that.
Moreover, a major deadline is looming: the 20th Congress of the Chinese Communist Party, next fall. A few weeks ago, Xi Jinping’s reappointment was set in stone. This remains the most likely hypothesis but it will not be as simple as expected.