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China’s Premier, Li Keqiang, Strikes Upbeat Tone Amid U.S. Tensions China’s Premier, Li Keqiang, Strikes Upbeat Tone Amid U.S. Tensions
(about 3 hours later)
BEIJING — China’s premier, Li Keqiang, presented an optimistic picture of relations with the Trump administration on Wednesday, arguing that the two sides would be able to overcome their smoldering tensions over trade imbalances, currency policy and geopolitical disputes across Asia. BEIJING — China’s premier, Li Keqiang, defended his government on Wednesday as a bulwark of economic and regional stability, arguing that smoldering tensions with the Trump administration over trade imbalances, North Korea and other disputes in Asia could be solved through dialogue.
The comments appeared intended to set an upbeat tone for a first meeting between President Trump and his Chinese counterpart, Xi Jinping, that is provisionally scheduled for next month at Mr. Trump’s Mar-a-Lago resort in Florida. The comments appeared intended to set an upbeat tone for a first meeting between President Trump and his Chinese counterpart, Xi Jinping, that is provisionally scheduled for next month at Mr. Trump’s Mar-a-Lago resort in Florida. In an annual news conference that lasted more than two hours, Mr. Li stressed his optimism about relations with the United States.
“This relationship is crucial for not just China and the United States, but also for regional and global peace, security and stability,” Mr. Li told hundreds of reporters at the end of the annual meeting of China’s legislature, the National People’s Congress. “This relationship is crucial for not just China and the United States, but also for regional and global peace, security and stability, and we have to protect its progress,” Mr. Li told hundreds of reporters at the end of the annual meeting of China’s legislature, the National People’s Congress.
“China and the United States now share extensive common interests. It’s also true that there are some differences between the two countries,” Mr. Li said. “But I believe it’s important for both countries to uphold strategic interests and to sit down to talk to each other so as to enhance mutual understanding and trust.” Mr. Li’s comments, under giant chandeliers in the lavish Golden Hall at the Great Hall of the People on Tiananmen Square, showed how quickly the outward mood in relations had shifted. Before and after his election victory in November, Mr. Trump threw down a series of challenges that rattled policy makers in Beijing.
Before and after his election victory in November, Mr. Trump threw down a number of challenges that rattled policy makers in Beijing. Mr. Trump threatened to punish China over its yawning trade surplus with the United States. Last year, the United States’ deficit in trade in goods with China reached $347 billion, and Mr. Trump has promised to close that gap, which he has also attributed to what he calls China’s rigged currency exchange policies. Many economists say that claim is an oversimplification.
Mr. Trump threatened to punish China over its big trade surplus with the United States. He suggested he might abandon longstanding American policy on Taiwan, the self-governed island that China treats as an illegitimate breakaway territory. His secretary of state, Rex W. Tillerson, promised to stop China’s building of islands as military outposts in the disputed South China Sea, where the Philippines, Vietnam and other neighbors have competing territorial claims. Mr. Trump also suggested he might abandon longstanding American policy on Taiwan, the self-governed island that China treats as an illegitimate breakaway territory. His secretary of state, Rex W. Tillerson, promised to stop China’s building of islands as military outposts in the disputed South China Sea, where the Philippines, Vietnam and other neighbors have competing territorial claims.
But more recently, Mr. Trump and Mr. Xi have spoken over the phone, and Mr. Trump reaffirmed established American policy that Taiwan is a part of “one China.” Administration officials have reined in warnings of possible military action in the South China Sea. And so far, at least, the White House has not introduced measures that could sharply cut the flow of Chinese goods into the United States. But since Mr. Trump took office, Chinese diplomats have pressed his administration to retreat from positions that could ignite an early crisis in relations. In February, Mr. Trump and Mr. Xi spoke over the phone, and Mr. Trump reaffirmed established American policy that Taiwan was a part of “one China.”
Last year, the United States’ deficit in trade in goods with China reached $347 billion, and Mr. Trump has promised to close that gap, which he has also attributed to what he calls China’s rigged currency exchange policies. But Mr. Li said that a trade war of tit-for-tat protectionist measures would ultimately damage the American economy. Administration officials have reined in warnings of possible military action in the South China Sea. And so far, at least, the White House has not introduced measures that could sharply cut the flow of Chinese goods into the United States.
“If a trade war breaks out between China and the United States, it would be foreign companies, in particular American firms, that would bear the brunt,” he said, citing what he said were findings from a foreign think tank. “Our hope on the Chinese side is that no matter what ructions this relationship experiences, this relationship will continue to move forward in a positive direction.” Those sources of tension could still flare, especially over trade and the South China Sea, where the Trump administration has promised to establish a more robust naval presence. The Trump administration is also likely to sell Taiwan a large order of weapons, which could renew tensions over that issue.
But like other Chinese leaders recently, Mr. Li put a bright veneer over those concerns. He said a trade war of tit-for-tat protectionist measures would ultimately damage the American economy.
Mr. Li said that if a trade war broke out between China and the United States, foreign companies operating in China, “in particular American companies, would bear the brunt.” He said he was citing findings published by a foreign think tank, apparently referring to the extra costs that American companies would face buying goods in China for the American market.
He also stressed that China would pay close attention to whether Mr. Trump’s administration stuck to the One China policy, which in effect denies Taiwan the possibility of recognition as a separate country, something to which pro-independence groups in Taiwan aspire.He also stressed that China would pay close attention to whether Mr. Trump’s administration stuck to the One China policy, which in effect denies Taiwan the possibility of recognition as a separate country, something to which pro-independence groups in Taiwan aspire.
“This policy constitutes the political foundation of China-U.S. relations,” Mr. Li said of the One China policy. He said: “With that foundation in place, we believe there are bright prospects for China-U.S. cooperation.” “This policy constitutes the political foundation of China-U.S. relations, and cannot and must not be shaken by vicissitudes,” Mr. Li said of the One China policy.
On North Korea, another issue over which the two powers have been at odds, Mr. Li repeated Beijing’s position that only renewed negotiations with Pyongyang stood a chance of curtailing its nuclear program. China, the North’s neighbor and sole major ally, hosted long-running multinational talks on the issue that fell apart after 2009.On North Korea, another issue over which the two powers have been at odds, Mr. Li repeated Beijing’s position that only renewed negotiations with Pyongyang stood a chance of curtailing its nuclear program. China, the North’s neighbor and sole major ally, hosted long-running multinational talks on the issue that fell apart after 2009.
“We hope that through the efforts of all parties the tense atmosphere can be eased and the parties can return to the track of dialogue,” Mr. Li said. “Nobody wants to have a constant ruckus all day at his doorstep.”“We hope that through the efforts of all parties the tense atmosphere can be eased and the parties can return to the track of dialogue,” Mr. Li said. “Nobody wants to have a constant ruckus all day at his doorstep.”
Mr. Li did not mention the antimissile system that the United States began deploying in South Korea last week as a shield against missiles from the North. China has vehemently opposed the system, which it says could also track its intercontinental ballistic missiles, undermining their potency as a nuclear deterrent. But Mr. Li stopped short of criticizing the antimissile system that the United States began deploying in South Korea last week as a shield against missiles from the North. China has vehemently opposed the system, which it says could also track its intercontinental ballistic missiles, undermining their potency as a nuclear deterrent.
Mr. Li also presented an optimistic view of China’s economy this year. At the opening of the meeting last week, Mr. Li said the government wanted the economy to grow 6.5 percent or more in 2017. The target represented a slight easing from last year’s goal, which was 6.5 to 7 percent. China’s economy grew 6.7 percent last year, according to official statistics. The secretary of state, Mr. Tillerson, is scheduled to visit Beijing over the weekend for talks about the meeting between Mr. Trump and Mr. Xi and also to discuss regional trouble spots, especially North Korea.
For Mr. Li, his annual news conference at the end of the legislative session was a rare chance to dominate the political stage, which is usually filled by the near-omnipresent president, Mr. Xi. Unlike his recent predecessors, Mr. Li has not taken a lead in setting economic policy, and some observers have wondered whether he might be replaced as premier after his first term ends next year.
But on Wednesday, Mr. Li held center stage, while crediting Mr. Xi with keeping the economy in good health since they were elected premier and president in 2013.
Mr. Li presented an optimistic view of China’s economy this year. At the opening of the meeting last week, Mr. Li said the government wanted the economy to grow 6.5 percent or more in 2017. The target represented a slight easing from last year’s goal, which was 6.5 to 7 percent. China’s economy grew 6.7 percent last year, according to official statistics.
At his news conference, Mr. Li said that the 6.5 percent target differed little from last year’s target. “We believe that China will continue to be a strong driving force in the face of a sluggish global economy,” he said.At his news conference, Mr. Li said that the 6.5 percent target differed little from last year’s target. “We believe that China will continue to be a strong driving force in the face of a sluggish global economy,” he said.
But the trade-offs between stoking growth and fixing underlying economic problems have become increasingly difficult and contentious.But the trade-offs between stoking growth and fixing underlying economic problems have become increasingly difficult and contentious.
The government says the economy must keep expanding at a relatively fast pace to create enough urban jobs for roughly 11 million rural migrants and new university graduates this year. Mr. Xi will also oversee a big leadership shake-up at a Communist Party congress this autumn, when he starts his second term as party leader, magnifying the government’s hunger for social confidence and stability.The government says the economy must keep expanding at a relatively fast pace to create enough urban jobs for roughly 11 million rural migrants and new university graduates this year. Mr. Xi will also oversee a big leadership shake-up at a Communist Party congress this autumn, when he starts his second term as party leader, magnifying the government’s hunger for social confidence and stability.
But China has come to depend on bigger and bigger injections of bank lending to fire up investment and demand, worrying economists who say that increasingly heavy debt and misspending will eventually drag down growth. Yet ever since the global financial crisis in 2008 and 2009, China has come to depend on bigger and bigger injections of bank lending and other credit to fire up investment and demand. That worries economists, who say that increasingly heavy debt and misspending will eventually drag down growth.
Much of the lending has ended up in housing and construction projects, including new expressways and airports, even in regions where demand is tepid. As a result, the growth dividend from each dollar of new credit has been shrinking year by year, even as company debt has expanded. China has limited its budget deficit to about 3 percent of economic output, a modest fiscal stimulus. But it has been rapidly increasing total debt in the economy, with overall credit expanding last year by an amount equal to almost one-sixth of the country’s economic output.
Industrial production and investment were strong in the first two months of this year, government statisticians announced on Tuesday, but that strength was again underpinned by heavy investment on the part of already indebted state-owned enterprises, as well as a continuing, mortgage-fueled frenzy in the country’s real estate markets, already among the world’s least affordable relative to local rents and incomes. Much of the lending has ended up in housing and construction projects, including new expressways and airports. That investment has increasingly taken place in less prosperous inland regions where demand is tepid. As a result, the growth dividend from each dollar of new credit has been shrinking year by year, even as nationwide debt, particularly borrowing by state-owned enterprises, has expanded briskly.
Mr. Li, however, sought to allay worries about rising Chinese debt. He said that there was no risk to the overall financial system and that the Chinese government’s relatively low budget deficit — roughly 3 percent of economic output — and large capital bases in banks would protect the country. But there were risks, he added. Mr. Li, however, sought to allay worries about rising Chinese debt. He said that there was no risk to the overall financial system and that the Chinese government’s relatively low budget deficit and large capital bases in banks would protect the country.
“We are fully aware of potential risks and will take prompt and targeted action,” he said. But he acknowledged that financial challenges remained, saying, “We are fully aware of potential risks and will take prompt and targeted action.”