China’s new prime minister tried to reassure the private sector in his first press conference, as concerns grew about the country’s future political directions with the formation of a new government loyal to leader Xi Jinping .
Xi’s longtime aide Li Qiang officially succeeded Li Keqiang as prime minister over the weekend. It has been tasked with reviving the world’s second-largest economy after three years of Covid restrictions and as tensions between the US and China escalate in a variety of areas, including technology and business.
In his first press conference as the country’s number two official, he sought to galvanize the private sector, a group scarred by years of a years-old regulatory crackdown and becoming wary about Beijing’s increasingly state-based approach.
“For a period of time last year, there were some incorrect discussions and comments in the community, which made some private entrepreneurs worry,” he told me on Monday.
“From a new starting point, we will create a market-oriented, legal and internationalized business environment, treat enterprises of all types of ownership equally, and protect corporate property rights and the rights and interests of entrepreneurs.”
He added that the new government “will promote fair competition between various business entities, and will support the development and growth of private enterprises.”
But Li also sought to moderate expectations, acknowledging that China’s target of reaching 5% GDP growth this year – its lowest in decades – “was no easy task”.
His comments came a day after Beijing made the sudden decision not to retire the current central bank governor in a move that was praised by analysts, who said it would boost investor confidence.
He indicated to me that Beijing does not want to separate from the United States.
“The Chinese and American economies have benefited from each other’s development,” he said. “China and the United States can and should cooperate, and there is great potential for Sino-American cooperation.”
“Opening up to the outside world is our basic national policy. No matter how the external situation changes, we will steadily move forward.” Concerns about China’s future direction have been mounting since October, when Xi stacked his first team with loyalists in a clean sweep not seen since the Mao era.
Over the weekend, the Chinese parliament confirmed the new cabinet line-up. As a group of Xi’s confidants took office, some Western-educated and reform-minded officials—including former Premier Li Keqiang and former Vice Premier Liu He—left.
Analysts worry that Xi’s preference for personal loyalty over technocratic competence signals an ideologically driven political trend that could dampen private sector growth and worsen Beijing’s relations with Washington.
The deteriorating economic prospects appear to have led top leaders to strike a more conciliatory tone toward private business, which contributes more than 60% of China’s GDP and more than 80% of employment, although the size of the state sector has dwindled.
Last week, Xi called on private companies to play a role in boosting growth, jobs and technological innovation.
“We always regard private companies and private entrepreneurs as people on our side,” he said.
In a surprise announcement on Sunday, Beijing decided to keep some of its existing economic leadership in place, including People’s Bank of China Governor Yi Gang, a US-educated economist.
The Chinese economy is facing an increasing set of challenges. The all-important housing market is in the midst of its worst ever slowdown. Consumer spending is sluggish. Youth unemployment remains high.
Business confidence has plummeted since the unprecedented regulatory assault on private companies. Relations between the United States and China are at their lowest point in decades, escalating tensions in technology and investment. Declining foreign investment in China.
“The reappointment of some senior financial and economic officials, including PBOC Governor Yi Gang as well as the finance and commerce ministers, indicates policy continuity and consistency under the adjustment of financial regulations,” said Ken Cheung, senior Asian foreign exchange analyst at Mizuho Bank. .
He added that the move should help improve foreign investors’ confidence in the future of Chinese investment.
Goldman Sachs analysts say the ranking reflects Chinese policymakers’ focus on “stability” as leaders of the new government aim to restructure the financial regulatory system.
Last Tuesday, Beijing announced a major government reform that would change oversight of its financial system and aim to promote technological self-reliance. The shake-up in the State Council, including the creation of a powerful financial regulator, is the biggest in years and is expected to consolidate party control at government expense.
This article was originally published by CNN.