China’s economy cause of growing concern in Beijing as US-China trade war takes toll on growth

  • Chinese premier Li Keqiang has urged local government officials to do everything possible to keep economic growth on track, sending a strong signal that Beijing is increasingly concerned about a deeper-than-expected economic slowdown amid a trade war with the United States.
  • Li told five provincial governors on 14 Oct 19 that local officials must “enhance the sense of urgency and responsibility” to ensure stable economic growth and “must put growth in a more prominent position” on their work agenda, according to a statement on the Chinese government’s website.
  • “The downward pressure on the economy is increasing continuously, and many real economic entities are struggling amid weak domestic demand,” Li said. He added local authorities must do everything they can to “make sure targets for 2019 are achieved.”
  • Li also told the governors from Shaanxi, Jiangsu, Henan, Hubei and Guangdong provinces that officials must strengthen their “bottom line thinking” – Communist Party jargon that describes the need to consider the worst-case scenario and take steps to avoid it.
  • The premier’s address was the first time the government has suggested its full-year targets – including a minimum gross domestic product (GDP) growth rate of 6% – are at risk of being missed.
  • Li did not announce any new economic stimulus measures in his speech, but told local officials to implement “already launched policies”, including cutting personal and business taxes, and lowering financing costs for small businesses.
  • They were also told to make good use of “special purpose bonds” – the proceeds of which are used to fund infrastructure and other designated projects – as a way to “expand effective investment”.

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