Chinese Premier Li Issues Third Warning on Economic Growth Amid Virus Curbs

China’s Premier Li Keqiang in less than a week issued warning about economic growth risks, signaling heightened concern about the outlook as widespread Covid lockdowns disrupt production and spending.

Li told local authorities at a seminar on Monday that authorities should “add a sense of urgency” when implementing existing policies. His remarks included, China will study and adopt stronger economic policies as needed to support the economy.

Pro-growth measures should be brought forward and accelerated, including tax and fee cuts, sales and usage of special bonds, and incentives to keep jobs, Li added.

Local governments should tap their own policy potential to tailor targeted supportive measures according to local conditions, he said. In the meantime, they should prevent introducing and correct policies that are unfavorable to market expectations.

He made similar warnings earlier,  highlighting the toll the economy is taking from lockdowns and other virus control measures imposed to curb the latest wave of omicron outbreaks.

According to economists of Nomura Holdings Inc., the risk of recession is rising in China.

“Global markets may still underestimate the impact because much attention remains focused on the Russian-Ukraine conflict and U.S. Federal Reserve rate hikes,” Lu Ting, Nomura’s chief China economist, and colleagues wrote in a Monday note.

The note added, with the central government making Covid containment a top policy priority, local politicians have an incentive to stick with strict controls ahead of a key leadership meeting later this year.

Li said that in the face of poor logistics due to Covid control measures, localities should attach great importance to its impact on the economy. Different places should strengthen inter-regional and inter-departmental coordination to ensure smooth international and domestic logistics, and maintain the stability of industrial and supply chains, he said.

The premier also urged the country to do a good job in spring planting of grains to ensure a harvest this year, which he says is the foundation for stabilizing prices.