China’s economy grew an “estimated” 5.2 per cent last year, beating the official target, the country’s number two leader Premier Li Qiang said in Davos, as he sought to allay concerns over its recovery from the Covid pandemic.
In a speech at the World Economic Forum, Li also urged the world to address what he described as a “trust deficit” among nations and, in a veiled dig at the US, said “multilateralism” did not mean that only a few countries could set the rules.
Li said China’s growth rate last year — a rise from the figure of 3 per cent in 2022 when the country was hit by widespread Covid lockdowns — was achieved without resorting to “massive stimulus” and the economy was making “steady progress”.
“We did not seek short-term growth while accumulating long-term risks, rather we focused on strengthening the internal drivers,” he said. “Just as a healthy person often has a strong immune system, the Chinese economy can handle ups and downs in its performance. The overall trend of long-term growth will not change.”
Beijing’s 2023 growth target of 5 per cent was China’s lowest in decades. The economy’s emergence from Covid has been hampered by a deep property slowdown, falling exports and a lack of investor confidence, forcing the government to step in with stimulus measures, though it has stopped short of the “bazooka” fiscal packages it has deployed in past crises.
The 5.2 per cent growth figure, which economists say was flattered by a low base effect in 2022, was in line with a Reuters poll of analysts. Economists expect the government to again set this year’s official growth target at 5 per cent, a goal they say will be more challenging because of the overhang of the property market and deflationary pressures.
But Li told the audience that China’s economy was similar to “hiking in the Alps”.
“Our European friends told me that to fully appreciate the majestic beauty of the Alps one has to zoom out and look from afar,” he said. “As I see it, it is the same way as the Chinese economy, one has to broaden the vision and take a panoramic view to . . . truly grasp where it is now and where it is going.”
Li’s announcement of the GDP figure surprised economists, who had been preparing for the official release of the data on Wednesday by the National Bureau of Statistics.
“China used to be a place where you’d know when this sort of thing would be published, but that has changed radically,” said Alicia García-Herrero, chief Asia-Pacific economist at Natixis, who described the decision to announce the figure early as “bewildering”.
Li said the return on foreign direct investment in China was about 9 per cent and the country remained open to international business.
“Choosing the Chinese market is not a risk, but an opportunity. So we embrace investments across businesses of all countries with open arms,” he said.
On multilateralism, he said China believed in the UN Charter, which recognises the sovereignty of all nations. But many European countries have criticised Beijing for not condemning Russia’s invasion of Ukraine.
Li used his speech to instead make a veiled attack on what China sees as US-led hegemony.
“The question is, what is true multilateralism?” he said. “Who will set the rules? What are the rules? If the rules are set by certain or a few countries, then we have to put quotation marks on the multilateralism because it will still be unilateralism in nature.”
Li also urged greater co-ordination between countries on macroeconomic policies, a reference to efforts by the US and its allies to reduce the reliance of their supply chains on China.
Ursula von der Leyen, president of the European Commission, who spoke after Li, responded: “We want to tell our Chinese friends, we do not want to decouple but we need to de-risk our supply chains in some ways.”
Von der Leyen said China was preparing export controls on three metals used in semiconductor production — germanium, gallium and graphite — and that this “was not trust-building”.
“So we are in intense discussions on that point”, she said. “We have to be very frank and very open . . . it is always better to address problems so that we can solve them.”
Additional reporting by Wenjie Ding in Beijing and Henry Foy in Davos
