Premier vows to break down barriers hindering economic recovery

Beijing is making economic recovery a higher priority on the work agenda for 2024, promoting efforts to break down barriers in consumption, foster a better business environment and push for a unified market.

The latest drive was heralded by Premier Li Qiang, who pledged at a study session of the State Council on Monday to tackle barriers to forming a vast market.

“It involves smoothing domestic trade, establishing a more favourable business environment, and stimulating market vigour, all while bolstering our global competitiveness through technological innovation and industrial advancement,” Li said.

His comments followed recent trips to Hubei, Shanxi and Shaanxi provinces, along with five separate State Council meetings this year, where he mostly addressed thorny issues, including technology, demographics, local debt and attracting overseas investors. The 5.2 per cent gross domestic product growth (GDP) last year has not yet revived consumer and investor confidence, while the country still faces huge challenges from the struggling property market, rising local government debt, subdued consumption and persistent external risks.

The government is widely expected to again set a growth target of “around 5 per cent” during the “two sessions” annual parliamentary meetings, which start next week.

At Monday’s State Council meeting, Li said the nation needed to speed up the removal of trade barriers set up by local governments, which have long been issues for foreign companies.

Beijing also needed continued efforts to build a market that protected the intellectual property rights of companies with fair market entry barriers and competitive conditions, he added.

The government was aiming to construct a unified market, to ensure a seamless exchange of production factors nationwide, including labour, commodities, capital and data, but the behaviour of local authorities remained a hurdle, analysts said.

“China’s local protectionism is dragging both foreign and domestic investment. If Beijing still insists on its criteria for evaluating local governments – purely on GDP figures – protectionism will prevail under the pressure to compete,” said Peng Peng, executive chairman of the Guangdong Society of Reform.

According to Peng, frequent meetings and trips by Li suggest that the country continues to face immense pressures, including challenges to its supply chain from Washington’s decoupling, continued weak consumer spending and an exodus of foreign investment. He suggested even stronger stimulus would help the economy along its way.

“China’s pull for investment has reached its limit, the market has yet to recover from the scars of the last three years of Beijing’s crackdown on the internet, off-campus education, real estate and strict pandemic policies,” Peng said. “If Beijing can announce even stronger market stimulus policies at the … two sessions, we may see a significant recovery in China’s economy in the second or third quarter.”

It involves smoothing domestic trade, establishing a more favourable business environment PREMIER LI QIANG