Premier Li says economy to meet growth goals, vows free trade support

Li Keqiang at the World Economic Forum’s Annual Meeting in Dalian

Premier Li Keqiang said China remains on track to meet its main economic goals for this year while warning of rising geopolitical risk and threats to the global upswing.

Anti-globalization voices are emerging and world geopolitical risks are increasing, Li told officials and business leaders yesterday at the World Economic Forum’s Annual Meeting of the New Champions gathering in China’s northeastern port city Dalian.

Li’s speech was a robust defense of globalization and a thinly veiled rebuttal of the narrative adopted by U.S. President Donald Trump, who has accused trading partners, including China, of unfair trading practices. It also had echoes of President Xi Jinping who also used the WEF’s Davos event in January to champion globalization. China also used a Group of 20 meeting in Germany in March to push back, unsuccessfully, against U.S. efforts to water down language of resisting protectionism.

Without the current rules-based world trading system, China’s economic opening up to the world would have been “unimaginable,” Li said. “Economic globalization has greatly facilitated the flow of goods, capital and personnel.”

Li also said the government will relax market access to the services and manufacturing sectors – addressing a key complaint of foreign businesses operating in China – and pledged to do more to entice investment and cut red tape for foreign companies. The country will treat domestic and foreign businesses in an equal way, he said.

With executives of foreign companies such as International Business Machines Corp. and McKinsey & Co. in the audience, Li addressed the concern that stricter capital controls the nation implemented to keep its currency steady will restrict companies to move their profits out of the border. Foreign direct investment declined in both May and April from a year earlier.

“There will be no restrictions on the flow of your profits,” Li said.

Acknowledging that the benefits of globalization haven’t been felt by everyone, Li said the answer was to strengthen global trade rules and institutions, take account of problems being felt by trading partners and avoid a blame game.

“Just like when we sprain our ankle when walking down the road, we shouldn’t blame the road and stop walking,” he said. “We need to adapt.”

The world’s second-largest economy is forecast to slow from the first quarter, when it posted the first back-to-back quarterly acceleration in seven years, though it is still on track to remain above the leadership’s growth target of at least 6.5 percent. Communist Party officials are working this year to balance preserving the expansion with tightening regulation to reduce risk as they prepare for a twice-a-decade leadership transition expected to take place this fall.

Li said the economy maintained steady growth in the second quarter, and China will be able to keep the expansion in a reasonable range. The surveyed jobless rate fell to 4.9 percent in May, the lowest reading “in years,” he said.

More than 2,000 representatives from politics, business, civil society, academia and the arts are attending the June 27-29 conference, also known as Summer Davos, to discuss topics from inclusive growth to the “new industrial revolution,” according to a report from China’s official Xinhua News Agency.

Li Daokui, a former adviser to China’s central bank, said on a panel discussion that yuan depreciation pressure will remain moderate in the next few years as long as there’s no major upheaval caused by the Trump administration. It’s a good time to further open China’s capital account and domestic companies won’t be afraid of opening the financial sector to foreign companies, said Li, a professor at Beijing’s Tsinghua University.

State Grid Corp. of China Chairman Shu Yinbiao said at a press briefing that thousands of new-energy power plants will create new jobs, with opportunities being created during construction and for operators and maintenance personnel.

“We will have more opportunities for jobs,” Shu said. “The transformation of energy will not impact employment, it will create opportunities.” AP