China will focus on employment and targeted Covid-19 curbs, Premier Li says

BEIJING (BLOOMBERG) - Chinese Premier Li Keqiang signalled a focus on jobs, flexibility on the economic growth rate and a shift towards making its Covid-19 control measures more targeted.

The most important thing is to keep employment and prices stable, and slightly higher or lower growth rates are acceptable as long as employment is relatively sufficient, household income grows and prices are stable, noted state media accounts of his comments to global business leaders hosted by the World Economic Forum on Tuesday (July 19).

Mr Li added that outbound commerce and trade activities, as well as cross-border travel for labour services, would be advanced in an orderly fashion.

"Keeping major economic indicators within a proper range also means that the macro economy can enjoy sustained and sound growth," Mr Li said in his speech at the virtual meeting, according to the official Xinhua News Agency.

He also said China would further resume and increase international passenger flights and steadily improve its visa and Covid-19-testing policies.

China's second-half outlook is clouded by Covid-19 outbreaks and the ensuing restrictions intended to control them.

Economic growth slowed sharply to 0.4 per cent in the second quarter, when dozens of cities, including Shanghai and Changchun, imposed lockdowns.

Many economists expect China will likely miss its economic growth target of about 5.5 per cent this year by a significant margin.

It would be the first time: The government did not set a target in 2020, during the first wave of the coronavirus outbreak, and only missed it slightly, by 0.2 percentage points, in 1998.

Prominent economists in China have also warned that the country could miss its target.

Gross domestic product may expand about 4.8 per cent this year, said Professor Liu Yuanchun, president of the Shanghai University of Finance and Economics, citing pro-growth policies that could lift growth above 6 per cent in the third quarter.

Prof Liu, who gave that figure in an interview with the 21st Century Business Herald, previously spoke to the Communist Party's Politburo in April.

For the economy to rebound in the second half, the government will need to keep outbreaks under control without resorting to damaging, widespread lockdowns, while also supporting growth through more spending even as the budget blows out.

Mr Li said the government has set up a dedicated mechanism to offer services and help resolve concerns that foreign enterprises encounter in the country.

Foreign companies have bemoaned China's restrictive policies, with nearly one in four European companies considering shifting their investments out of the country, according to a survey released last month. American firms have also reported challenges.