China’s economy is open for business to foreign investors, the country’s premier has said, as he extolled the virtues of a rich middle class ready to consume expensive western goods.
Li Qiang, China’s premier and second in command to the president, Xi Jinping, told delegates at the World Economic Forum that the world’s second largest economy had bright growth prospects despite recent fears over deflation and stagnant household spending.
In a bullish speech, Li told the audience of global policymakers and business leaders that China offered multinational companies a “supersized” market of 400 million middle-class consumers, which is due to double to 800 million within a decade.
“[China] will continue to provide a big stage for various businesses and talent. In the face of weak global demand, the market has become one of the most scarce resources. The Chinese market with vast space and growing depth, will play an important role in boosting global aggregate demand,” Li said. “For a growing range of products, the focus of consumer demand is shifting from quantity to quality.”
The pitch to business leaders is set against concerns about deflation in China, which is struggling to stimulate consumer demand and deal with its debt overhang among local authorities two years after the pandemic.
Li said China’s economy was likely to have expanded by 5.2 per cent in 2023, above the 5 per cent annual target set by the Communist Party. Most global forecasters, including the International Monetary Fund, expect growth to slow to the region of 4.6 per cent this year.
Measures of consumer and producer price inflation have turned negative in recent months, raising expectations that Beijing’s authorities will be forced to provide direct fiscal stimulus to help reluctant households to keep spending.
Li said China had not resorted to “massive stimulus” which would “seek short-term growth while accumulating risks. Rather we have focused on internal growth drivers. China has established sound and solid fundamentals, just as a healthy person has a strong immune system. The Chinese economy can handle ups and downs in its performance but the overall trend will not change.”
Business Briefing In-depth analysis and comment on the latest financial and economic news. Sign up with one click
Speaking directly after the premier, the European Commission president, Ursula von der Leyen, made pointed remarks about the continent’s need to “de-risk” its economy from China, by reducing the reliance on Beijing’s raw materials, electric vehicles and green supply chains.
Von der Leyen said the EU was in talks with Beijing over China’s imposition of export controls on key materials such as graphite and Valium. Brussels has launched an anti-dumping investigation into Chinese biofuel, triggering a tit-for-tat response on trade tariffs.