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China’s premier said in an emergency meeting Wednesday that the Chinese economy faces “grim challenges,” in an unusually stark warning that comes as coronavirus controls have paralyzed parts of the world’s second-largest economy.

Premier Li Keqiang, along with other top officials, spoke to more than 100,000 representatives from provincial, city and county levels of government in a teleconference hosted by China’s cabinet, according to state media reports. Li called on local governments to help stabilize the economy, which he said was at risk of contracting during the second quarter.

Citing unforeseen factors such as continued outbreaks of the coronavirus and the war in Ukraine, Li said his chief goal was to ensure that the economy expands in the second quarter.

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“This target is not high, and it is far worse than the growth target of 5.5% that we proposed at the beginning of the year,” he said, referring to the 2022 GDP growth target. “But it is based on reality and is what we must do,” he said, according to a transcript of his speech posted online.

Li said many international organizations have revised down their expectations for China’s growth — with UBS dropping its forecast to 3 percent this year. “We cannot accept this,” he said, noting that the economy had slowed that much only once, in 1990, over the past 40 years.

His comments, delivered in a meeting unusual for its scale and format, underscore the difficulty China faces as it tries to balance economic growth — which has long underpinned the ruling Chinese Communist Party’s popular support — with the political goals of the country’s top leader, Xi Jinping.

Xi is seen as spearheading some of the main policies blamed for curtailing growth, from the strict zero-covid policy to a broad crackdown on the technology industry and other private sectors in an effort to exert more party control over the economy. Li’s warning on Wednesday, the latest of several issued by the premier, also underscores the challenges Xi faces as he prepares to break with tradition and take on a controversial third term later this year.

Li, who as the No. 2 in the country is traditionally charged with leading the economy, has been sidelined for much of his tenure. But in the past few months, he has stepped into the spotlight to urge changes that would bring the economy back on track.

In Wednesday’s teleconference, Li said his country’s economy faced hardships that are in some ways greater than in 2020, at the beginning of the coronavirus outbreak. He cited indicators including employment, industrial production, power generation and cargo freight as all having trended lower in recent months.

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According to the National Bureau of Statistics, the unemployment rate in urban areas in April reached 6.1 percent, the highest since March 2020. The unemployment rate for those between the ages of 16 and 24 was 18.2 percent, the worst since the government began tracking monthly employment data in 2005.

“We are having this meeting because there is no time to lose,” Li said.

He stressed that many small and medium-size enterprises have struggled during the pandemic as a result of rising costs and weakening demand. Li called on governments to strike a better balance between economic growth and coronavirus measures.

China is struggling to contain its worst outbreak since the pandemic began, as the more transmissible omicron variant continues to breach strict quarantine measures. Almost two months of chaotic management of lockdown measures in Shanghai, a financial hub and China’s most populous city, has especially weakened public faith in the zero-covid policy. The city, which plans to begin lifting restrictions on June 1, said Thursday that 350,000 people were still affected by covid controls.

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A survey by the American Chamber of Commerce in China released this month found that more than 50 percent of U.S. businesses have delayed or reduced their investments in China because of the recent outbreaks. Half of respondents said foreign talent is significantly less willing to relocate to China because of the covid policies.

Not all were comforted by Li’s comments, a copy of which quickly circulated on Chinese social media after the meeting. On WeChat, one user with the surname Chang, working in online education, posted in response to the speech: “You don’t change the direction of the Titanic. Instead you spend your time thinking about how best to repair the hull, filling in gaps. It’s easy to see what the end result will be.”

Lyric Li in Seoul, Pei-Lin Wu and Vic Chiang in Taipei contributed to this report.



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