Stay informed with free updates
Simply sign up to the Chinese business & finance myFT Digest — delivered directly to your inbox.
China’s premier Li Qiang attributed his country’s competitiveness to technological innovation at a World Economic Forum conference as he dismissed by implication international complaints over state subsidies.
Speaking at the WEF’s “Summer Davos” event in the northern port city of Dalian on Wednesday, Li touted research and development spending by Chinese businesses and achievements in sectors ranging from batteries to communications technology.
“The key to the competitiveness of Chinese products is not, as some people claim, that it relies on government subsidies,” he said, adding that “the Chinese government is not that wealthy, nor can it afford them”.
His comments follow criticism from China’s trading partners of its economic model, in which Beijing’s use of industrial policy in priority sectors is seen to drive overcapacity. China’s trade surplus hit a record $1.2tn last year on the strength of goods exports.
Years of mounting trade tensions culminated in an explosive tariff war between Washington and Beijing last year, while four of the EU’s biggest economies are pushing for tougher measures to defend European industry against what they call “the rise of unfair trade practices”.
The IMF this year called on China to halve its subsidies, which it estimated amounted to 4 per cent of GDP and said were “giving rise to international spillovers and pressures”.
The WEF’s “Annual Meeting of the New Champions” — which alternates between Dalian and Tianjin and is China’s answer to the winter gathering of business leaders and heads of state in Switzerland — has in the past drawn international executives and been closely watched for comments from Beijing’s top policymakers on major economic trends.
In recent years, Li, Beijing’s number-two official, has used the event to portray China as a pillar of the global trading system and quell western concerns over the country’s surging exports.
Delivering this year’s keynote address on Wednesday, Li praised domestic businesses that had undertaken “costly R&D spending” and faced “unfair external pressures”.
He highlighted the example of Huawei, which has been constrained from accessing the most advanced chipmaking technology by US export controls.
Li said Huawei had “long suffered from financial and technological blockades” but had “persevered”, investing more than Rmb1tn ($147bn) in R&D over a decade, and “achieved a host of breakthroughs in frontier technology”.
Li hit out at “unfriendly narratives” such as warnings of a second China shock, a reference to current echoes of the initial exports boom after the country joined the World Trade Organization in 2001.
“In the past, China’s big market and low-cost production factors had provided market dividends for the world,” he said.
“Today while continuing to provide even greater market dividends, China is also offering more and more innovation dividends with its technological progress and industrial upgrading.”
As well as pledging to expand market access, a common complaint of western trading partners and business chambers, Li warned over risks from artificial intelligence and the need for international regulatory co-operation.
“Without commensurate governance” to control the risks, he added, “the fallout could be severe”.
Li also sought to reassure the audience over the state of the domestic economy, where retail sales in May declined for the first time since 2022, and a year-to-date fall in investment steepened.
China’s economy had “maintained a sound momentum” in the second quarter, he said.
Additional contributions from Cheng Leng
