China Building ‘Mega-sized Consumption Powerhouse,' Premier Says
(Bloomberg) -- Premier Li Qiang has projected confidence that China can turn consumption into a driver for the economy, while also casting his nation as a stabilizing force in a rapidly shifting global trade landscape.
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Policymakers were growing the nation 'into a mega-sized consumer powerhouse on top of its solid foundation as a manufacturing power,' Li said in a speech at the World Economic Forum's meeting in Tianjin on Wednesday. 'This will bring vast markets to enterprises from all countries.'
He added that while the world was seeing a host of global trade frictions, China was positioned to 'to cross cycles, move forward steadily, and continue to inject more stability and certainty into the world economy.' Li didn't directly mention the Trump administration's tariffs or Washington's tech curbs but called for 'all parties to avoid the politicization of economic and trade issues,' saying Beijing's approach offered win-win outcomes.
Chinese officials often express confidence they can build up the consumer sector into a key engine of the economy but the task is becoming more urgent as governments around the world push back on its huge amount of exports. Those tensions have been highlighted by a trade war with the US that is now in the midst of a fragile truce.
The world's second-largest economy continues to struggle with weak consumer sentiment and deflationary pressures, although strong retail sales in May gave it some relief from US tariffs. Consumer enthusiasm for a government-subsidized home goods trade-in program has been so great that provinces are quickly running out of funds the national government has distributed.
State media has said China will allocate the remaining 138 billion yuan (some $19.2 billion) in planned funds to provinces to ensure consumer access to subsidies throughout this year.
Policymakers will likely need to step up support for the economy to achieve the target of around 5% they set for this year. The government has increased spending at the fastest pace in three years to bolster growth, pushing the budget deficit to 3.3 trillion yuan by May.
Global business executives and world leaders including Singaporean Prime Minister Lawrence Wong and Vietnamese Prime Minister Pham Minh Chinh, are attending the meeting also known as Summer Davos in the northern Chinese city of Tianjin.
--With assistance from Philip Glamann, Qianwei Zhang and Yujing Liu.
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