Chinese Premier’s Economy Speech Offers Plenty for Critics to Dislike

BEIJING—Premier Li Keqiang’s nearly-two-hour speech laying out China’s economic priorities for 2018 is unlikely to ease trade tensions between Beijing and Washington.

Opening the National People’s Congress on Monday, Mr. Li again emphasized industrial policies the West has criticized as benefiting Chinese companies at the expense of foreign competitors.

He listed broad goals for advances in technologies, from big data to aircraft engines to clean cars, articulated in the “Made in China 2025” plan to boost manufacturing. Senior U.S. officials including Trade Representative Robert Lighthizer have called the plan a threat to fair competition, saying it encourages state subsidies for domestic companies and drives them to force technology transfer from foreign partners.

Mr. Li’s pledge Monday to “speed up work to build China into a leader in manufacturing” is likely to feed critics’ concerns about Beijing’s quest for self-sufficiency in tech sectors like robotics and semiconductors. Trump administration officials are weighing trade and investment penalties against China as they complete an investigation into allegations of Chinese theft and expropriation of American intellectual property.

In the past month, senior Chinese officials have sought to restart economic talks with the U.S., but that hasn’t deterred President Donald Trump’s trade offensive. On Thursday, he announced stiff new tariffs on steel and aluminum imports—even as President Xi Jinping’s top economic adviser, Liu He, was in Washington meeting with U.S. officials including Mr. Lighthizer, Treasury Secretary Steven Mnuchin and National Economic Council director Gary Cohn.

In his speech Monday, Premier Li cited challenges from rising global protectionism. Without giving details, Mr. Li pledged to step up efforts to invite in foreign capital and promised tax deferrals for profits reinvested in China.

China unveiled the “Made in China 2025” plan in 2015 to foster new growth drivers. Mr. Li said Monday that China will create testing zones for the program this year, though he didn’t give any details. A separate report issued by the National Development and Reform Commission, China’s top economic-planning agency, said it will set up a Made in China 2025 development fund.

Even within the Chinese government, some officials have cast doubt over the effectiveness of the country’s largely state-led industrial policies. For instance, they say, cheap loans by various levels of government to battery makers in the past couple of years—betting on the fast-growing electric-car industry—have encouraged overproduction.

In his meetings with U.S. business leaders and officials in Washington last week, Mr. Liu, the trusted adviser to President Xi, played down the importance of the Made in China 2025 plan in fostering growth, according to individuals with knowledge of the exchanges. He also suggested it could worsen excess capacity.

Mr. Liu is expected to be named as a vice premier in charge of China’s industrial sector and financial system during the legislative session. It is unclear whether the Made in China 2025 program will be revised once he takes charge.

“It’s incontrovertible that to achieve its goal of making China a high-tech power, the Chinese government has raised spending, reduced market access, and increased pressure for technology transfer,” said Scott Kennedy, a deputy director at the Center for Strategic and International studies, a Washington think tank.

“Simply denying the significance of Made in China 2025 will continue to fall on deaf ears in Washington,” Mr. Kennedy said. “Americans are watching what China does, not what it says.”

Write to Lingling Wei at

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