China brought a large delegation to this year's World Economic Forum in Davos to try to convince the world that the globe's second-largest economy is still open for business and a reliable place to invest. But analysts say Premier Li Qiang’s speech on Tuesday was short on specifics that might have reassured investors.
Li led a delegation of 140 people to this week’s five-day meeting of global political and business leaders. China brought as many as 10 ministerial-level officials related to China's economic affairs, according to the U.S. news website Politico. Li is the highest-ranking Chinese leader to attend the annual meeting since 2017, reflecting the importance Beijing attaches to it.
Anna Ashton, director of China corporate affairs and U.S.-China at Eurasia Group, a New York-based global political risk consulting firm, told VOA in an email that China's attention to the meeting “underscores 1) Beijing's continued interest in shaping global economic relations and development efforts, and 2) the importance Beijing places on reviving its international trade and investment relationships."
In his speech, Li assured investors and politicians that China's economy has "huge potential" and remains an "important engine" of global growth despite the serious economic headwinds the country has seen over the past year.
Signs of trouble
China’s economy has been struggling to recover post-pandemic with the property market tanking, high youth unemployment and a drop last year in exports for the first time since 2016.
In the third quarter of last year, China recorded its first quarterly foreign direct investment deficit of $11.8 billion, the first time that has happened since records began in 1998. That means divestments and business downsizing were $11.8 billion greater than new investment, according to Bloomberg.
China’s official gross domestic product growth for 2023 was 5.2%, meeting its target of around 5% but lower than analysts’ expectations and one of its lowest annual growth rates in decades.
Despite the challenges, Li on Tuesday said that the economy’s long-term positive trend would not change, and that China would continue to contribute to world economic development. He also promised China would stay committed to its fundamental policy of opening its door wider to the world.
Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics, told VOA that Li's speech was generally positive and showed that he hoped to eliminate outsiders' negative views of China's economy.
But he added that Li’s speech did not list any specific measures Beijing would take that would attract Western companies, doing little to alleviate their concerns about where China’s economy is headed.
"I think the business community, especially firms that have big operations in China, would have the mood of 'show me,' because they can recite all sorts of regulations and restrictions that hamper their ability to do business, take their intellectual property, and make it really not such a friendly environment,” he said.
“So this speech did not have anything that I would call ‘concrete measures’ that would really appeal to the business community. So they will be more skeptical.”
Reasons for concern
Some trade groups say there is a shift away from investment in China’s economy in response to tightened political controls, including raids on firms and exit bans on foreign executives.
A November survey by the Conference Board, a U.S.-based nonprofit business membership and research group, showed that CEOs of multinational companies with operations in China are quickly losing confidence in that country.
The survey’s confidence index dropped to 54 on a scale of 0-100 from a record high of 72 in April. Forty percent of CEOs surveyed also expected capital investments in China to decrease, and almost as many expected to lay off employees in the next six months, compared with 9% in the first half of last year.
Japan’s Chamber of Commerce in China on Monday published figures showing 48% of companies surveyed said they did not invest in China or reduced their investment in 2023 compared with a year earlier.
According to Reuters news agency, Li said at a luncheon after his speech Tuesday, "We will take active steps to address reasonable concerns of the global business community."
Just as Li was telling the world that China's door would only open wider, China's President Xi Jinping was sending a different message that emphasized the primacy of the Chinese Communist Party.
In a speech on January 16, Xi reiterated that China should advance economic development with “Chinese characteristics” that is different from Western financial models, adhering to the party's centralized and unified leadership over economic work.
Eurasia Group’s Ashton said business thrives on predictability.
"The significance of Li's words will be best assessed in the follow-through,” she said. “China's own actions have and will continue to factor into the turbulent geopolitical atmosphere that Li described. Divergent priorities, interests and convictions cannot just be wished away, and cooperating effectively to address them is easier said than done."
Just days before its annual meeting in Davos, Switzerland, the World Economic Forum released a survey of economists showing that none of them anticipate anything more than moderate expansion in China's economy this year.
