Zhu Rongji was the last Chinese prime minister to fail to meet an annual growth target. That was in 1998, the year he took office, and which (to be fair) saw Asia plunge into financial crisis. The recent publication of a series of Zhu’s speeches has refocused attention on his legacy, especially how some of his more ruthless reforms inflicted short-term pain for long-term gain. Another question then beckons: is the current prime minister ready to adopt a similar playbook?
At the World Economic Forum in Dalian last week, Premier Li Keqiang gave another keynote speech calling for an overhaul of many of the state-dominated sectors in the domestic economy, as well as promising to continue to take steps towards interest rate liberalisation and to achieve the full convertibility of China’s currency.
Li also revealed that the government had toyed with the idea of launching a new stimulus package, but then decided against it.
Instead he sought to manage growth expectations, saying the double-digit levels of days gone by were “a miracle in history”. Now the economy has entered a phase of “medium to high rate growth”, Li said, adding that this year’s target – 7.5% – should still be regarded as a strong performance for any major economy.
Li also opined that his experiences working the land during the Cultural Revolution has helped him face the challenges in managing the Chinese economy. “If the managers of this building have the experience of cleaning the toilets, I believe they can better manage this complex,” he said, referring to the conference centre where the Summer Davos summit was held.
It probably wasn’t the sort of metaphor that the business folk in the audience were expecting. But it might be indicative that – like Zhu – Li’s term is going to be marked by some welcome plain speaking…
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