Xi's right-hand man delivers hammer blow to China economy with major snub to investors

Xi Jinping's second-in-command has delivered a considerable blow to the Chinese economy after snubbing investors and the press at a pivotal meeting of the Chinese Communist Party.

Premier Li Qiang was scheduled to attend a Q&A during the party's annual "Two Sessions" gathering but he ultimately skipped the event.

Li's unexpected move comes as China continues to grapple with a sluggish economy in the aftermath of the coronavirus pandemic.

His absence was the first time in over 30 years since a Chinese premier, whose tasks include overseeing economic policy, did not take questions during the Two Sessions.

The event is normally earmarked as a pivotal occasion for investors in both China and abroad to learn of Beijing's spending priorities for the following fiscal year.

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NPC spokesperson Lou Qinjian claimed Qiang had been working on a new report on government progress and the document would be released alongside further reports on China's economic health by the finance minister.

The Q&A session was due to take place at a time of heightened concerns about the Chinese economy as slowing growth and last year's revision of anti-espionage law – which led to raids at the headquarters of international due diligence firms – have forced investors to move away from Beijing and Shanghai.

Goldman Sachs Investment Strategy Group chief Sharmin Mossavar-Rahmani recently said: "Our view is that one should not invest in China."

China's economy, the world's second-largest, grew at a 5.2 percent pace in 2023, but that was from a relatively low pace since it expanded only three percent the year before, one of the lowest rates since the 1970s.

Growth of around five percent would be cause for rejoicing in the US and other major economies, but it's moderate for a developing economy with a huge population like China's.

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Pan Gongsheng, the head of China's central bank, and the other senior economic planners speaking on the sidelines of the congress, said Beijing has more policy tools it can turn to, such as reducing the reserve ratio requirement, or the amount of funds banks must keep in reserves.

They emphasized Beijing’s determination to put one trillion yuan (about $140 billion) in special, ultra-long-term bonds to productive use to upgrade industries and advance technologies in key areas such as clean energy.

Despite robust growth in China's exports in the first two months of the year, Commerce Minister Wang Wentao said global demand may remain muted given the recent trend toward protectionist measures.

China's own exports fell last year, adding to drags on the economy from weak consumer demand and a downturn in the property market, a major contributor to demand for construction, appliances and many other industries.

China plans to do more to promote exports of higher-value products and to support smaller and mid-sized companies in tapping world markets, he said.