MercoPress. South Atlantic News Agency

Chinese economy stalling: combating Covid-19 and keeping jobs more significant than GDP growth criteria

Premier Li Keqiang warned of economic “hardships to some extent greater than those seen during the initial virus outbreak in 2020”.

The Chinese economy is not working as smoothly as expected and is facing many challenges, admitted Premier Li Keqiang during a major conference on Wednesday.

 According to indicators in March and April, employment, industrial production, power generation and cargo freight pointed downwards, with “hardships to some extent greater than those seen during the initial virus outbreak in 2020”.

Private economists polled revealed that the world's second largest economy this year will fall short of its 5,5% target, possible at 4,5%, a first time for Beijing stats office, since the priority has become containing and eliminating the Covid 19 pandemic, which under strict measures has meant the lockdown of whole cities and regions.

Anyhow Li stressed that protecting the economy's resilience and striving to ensure reasonable growth during the second quarter and a decline in the unemployment rate as soon as possible, must be within a reasonable range.

Unemployment reached 6,1% during April, the highest since February 2020, and has put the Chinese administration under great strain since March because of the Covid 19 outbreaks and the pledge from president Xi Jinping to enforce a Covid Zero situation as the top priority.

“At the same time we control the pandemic we must complete our economic development policy”, Li told an audience of thousands of officials convened to listen about the current situation. It will be the first time in three decades that Beijing misses its targets by such margins.

However Li and other officials from the economic area have repeatedly emphasized on protecting jobs, saying that government will help companies with subsidies to ensure unemployment remains below 5,5%, even in the extreme situations caused by the pandemic.

Allegedly president Xi has said that GDP growth as an only objective, will be included in a group of targets to which Communist party members must work to achieve, since GDP “should not be considered the sole criteria of success”.

Li then described a raft of 33 measures to be implemented in support of private companies, including tax cuts, and also helping consumers by cutting them on the purchase of new cars. Regional governments were instructed to invest heavily in infrastructure with bonds to be supplied by the Treasury.

“The central government has introduced measures to stabilize the economy, but that economic activity — as measured by power generation, cargo movements, exports and consumption — hasn't expanded in proportion to the pro-growth policies, and this is mostly attributed to issues regarding implementation of the measures at various local levels”, admitted Li.

The State Council will dispatch a task force to 12 provinces on Thursday to oversee local governments' policy implementation and the roll out of supplement measures rollout, the premier disclosed, adding that major economic indicators for the second quarter across different parts of the country would be published by national statistics departments in ”a law-abiding and truth-based manner

Buoyed by the news, both Chinese mainland shares and Hong Kong stocks ended higher on Wednesday, reversing the previous day's losses.