Rising Attention on China's Second-in-Command Li Keqiang... The Return of 'Liconomics'

China's People's Daily Publishes 10,000-Character Speech by Premier Li Three Weeks Later
Japan's Nihon Keizai Evaluates as "Balancing Power with President Xi"
Foreign Media: "Xi Jinping's Centralized Power System in Turmoil... Premier Li's Position Strengthened"

[Image source=Yonhap News]

[Asia Economy Reporter Kim Hyunjung] Premier Li Keqiang, once regarded as the "forgotten second-in-command" within the power structure centered on Chinese President Xi Jinping, has recently reasserted his presence. Some predict the return of "Likonomics," a macroeconomic policy led by Premier Li, amid the economic turmoil caused by the zero-COVID policy.

On the 18th, Japan's Nihon Keizai Shimbun reported, "Over the past nine years, power has concentrated in President Xi, rendering the premier's authority nominal, but in the past month, the premier's powers have undergone drastic changes."

This atmosphere is also sensed from the People's Daily, the Chinese Communist Party's official newspaper, which on the 14th dedicated almost an entire two-page spread to Premier Li's speech. The People's Daily prominently featured nearly 10,000 characters of the speech delivered at the State Council's 5th Anti-Corruption Work Conference on the 25th of last month. According to Nihon Keizai, this report caused significant stir within the Communist Party. They questioned why a speech from three weeks ago was now published in full on a single page. The newspaper analyzed, "It is likely a move to balance the strong power of President Xi."

While the speech broadly focused on the theme of "anti-corruption," which President Xi often emphasizes, a closer look reveals that Premier Li stressed economic recovery plans, market orientation, tax burden reduction, support for small and micro enterprises, and employment.

This has led to analysis that it signals the return of Likonomics, which was a hot topic shortly after the current government took office. Likonomics is a portmanteau of Li (Premier Li) and Economics, coined by British investment bank Barclays Capital. The initial version of Likonomics aimed for medium- to long-term growth despite short-term pain, while in 2015, when China's economic growth slowed, a "2.0" version emerged emphasizing economic restructuring and promotion of capital investment.

In this speech, Premier Li stated, "Promoting economic and social development is the government's fundamental duty and an inevitable requirement of Party conduct construction that signifies clean politics," criticizing the practice of merely chanting slogans during policy implementation or reporting only good results while hiding problems. Nihon Keizai interpreted this as "a subtle criticism of the sluggish execution of economic policies effectively led by President Xi."

[Image source=Yonhap News]

Considering China's economic indicators plunged to their worst in April, some analysts see Premier Li's rise as inevitable. China's April retail sales and industrial production growth rates, announced on the 16th, recorded -11.1% and -2.9%, respectively. The urban unemployment rate, a key livelihood indicator, rose to 6.1%, surpassing the government's upper management target of 5.5%. Export growth and the manufacturing Purchasing Managers' Index (PMI) stood at 3.9% and 47.7, marking the lowest levels since the early pandemic period.

Western media have also recently focused on Premier Li's strengthened position within the Party. On the 12th, The Wall Street Journal (WSJ) reported that recent discussions on broadly easing regulations on private tech companies and real estate loans, as well as resuming production for companies halted by COVID-19 lockdowns, were led by Premier Li. China's second-in-command in the economy, Vice Premier Liu He, also unusually publicly expressed support on the 17th for the development and listing of big tech companies, reinforcing this analysis.

Although Premier Li is scheduled to step down next spring due to term limits stipulated in the Chinese constitution, if he maintains his Party power and presence as recently, the situation could change. Nihon Keizai analyzed, "There is a growing possibility that Premier Li will hold significant responsibilities in the next administration responsible for the five years following the Party Congress." It added, "For President Xi to reign as the sole strong leader, he must achieve a complete victory in political battles," and "Something will happen. This is what usually occurs every five years before the Party Congress."

Meanwhile, Premier Li is considered a key figure of the Communist Youth League (Gongqingtuan) faction led by former President Hu Jintao. President Xi is classified as part of the princeling faction associated with former President Jiang Zemin.