Xi Defends China’s Covid Response Amid Mounting Economic Woes
President Xi Jinping defended China’s lockdown-dependent approach to fighting the pandemic, as he sought to reassure the world that the country was still committed to opening its economy.
“We need to work together to defend people’s lives and health,” Xi told the annual event held in China’s southernmost Hainan province. “Safety and health are the prerequisite for human development and progress. For humanity to clinch the final victory against the Covid-19 pandemic, more hard efforts are needed.”
China is seeking to support economic growth weighed down by lockdown measures to contain the country’s worst Covid-19 outbreaks since the early days of the pandemic. March data showed the biggest contraction in retail sales and a surge in unemployment to the highest since early 2020, even before more stringent virus-control measures were introduced in places like Shanghai in April.
“It seems that his speech continues to highlight the risks from Covid-19, but also sticking to his stance for reforms, which is something that has been mentioned before,” said Jun Rong Yeap, a strategist at IG Asia Pte. “Therefore, it seems that the speech has failed to provide any significant uplift for the Chinese equities market, probably as market participants were expecting some form of reassurances that did not play out.”
The CSI 300 benchmark was down 0.5% as of 10:30 a.m. local time after rising by 0.4% in early trading. The gauge saw almost 3 stocks declining for every one that rose, with solar energy related stocks such as Longi Green Energy Technology Co. and Flat Glass Group Co. among its top losers.
Economists at banks from UBS Group AG to Nomura Holdings Inc. have cut their full-year growth forecasts to well below the governments’ official growth target of about 5.5%. That adds social risks to the political pressures confronting Xi as he prepares for a twice-a-decade leadership reshuffle later this year expected to give him a precedent-breaking third term as Communist Party leader.
“The fundamentals of the Chinese economy, its strong resilience, enormous potentials, vast room for maneuver, and long-term sustainability remain unchanged,” Xi said. “They will provide great dynamism for the stability and recovery of the world economy and broader market opportunities for all countries.”
Participants at the Boao forum included Israeli President Isaac Herzog, Philippine President Rodrigo Duterte, and International Monetary Fund Managing Director Kristalina Georgieva.
China has faced criticism from the country’s largest export markets, the U.S. and European Union, for refusing to condemn Russia’s invasion of Ukraine. Xi’s support for Russian President Vladimir Putin’s justification for attacking his neighbor has fueled fears of foreign sanctions and an accelerated decoupling from the West.
Although Xi made no direct references to Russia, Ukraine or the U.S., he did take several veiled swipes at Washington’s efforts to use its alliance network and financial influence to force Moscow to end the conflict. He said the “practices of decoupling, supply disruption, and maximum pressure won’t work” and called for what he called a new global security initiative to reduce conflict.
“The international community has developed into a complex and sophisticated, organically integrated machine,” Xi said. “And the removal of one component will cause the whole machine to face serious difficulties in operation. Those who are being removed will be damaged, so will those who remove it.” BM