China premier Qiang warns against 'destructive' economic decoupling

Chinese Premier Li Qiang issued a stark warning at the World Economic Forum in Dalian on Tuesday, saying that economic decoupling among nations could lead to dire global consequences.

Hitting back at criticism that his nation’s industrial policy has led to overcapacity, Li said that such “regressive actions” would drag the world into a “destructive spiral” where intense competition for a larger share of diminishing resources would ultimately harm all parties involved.

Addressing the forum, Li defended China’s industrial policies against accusations of overcapacity and dumping cheap goods into the global market. He said that China’s advancements in science and technology, which he claimed provide a platform for enterprises to innovate and enhance their products. “Exploration should not be seen as a zero-sum game,” Li said while highlighting the need for cooperative rather than adversarial international relations.

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The statements come amid heightened tensions over trade practices. Canada recently announced measures to restrict imports of Chinese-made electric vehicles (EVs), aligning its policy with the Biden administration’s move to significantly increase tariffs on such imports. The US plans to raise tariffs on Chinese EVs to as much as 102.5%, while the European Union is also considering tariff hikes up to 48% on certain vehicles.

According to a report by Bloomberg, China has suggested it might lower existing tariffs on large-engine cars from Europe if the EU backs down on the planned levies on EVs.

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Li’s remarks came a day after Chinese President Xi Jinping’s call for enhanced innovation to overcome foreign dominance in crucial technologies.  Speaking at a science and technology conference in Beijing on Monday, President Xi Jinping stressed the need for China to overcome critical challenges in several key areas.

Xi called for concentrated efforts to achieve breakthroughs in what he described as “bottleneck” technologies, specifically highlighting integrated circuits, industrial machine tools, basic software, advanced materials, scientific research instruments, and seed sources.

Despite challenges such as a prolonged property downturn, weak consumer confidence, and rising local government debt, Li expressed optimism about China’s economic outlook. He reaffirmed China’s goal to achieve approximately 5% growth for the year, a target set earlier.