No one is really reassured by the new premier’s rhetorical support for the private sector

This is what the Chinese business press is buzzing about today:

Li Qiang reaffirms support for the private sector, but is anyone convinced?

At a National People’s Congress (NPC) press conference earlier today, Lǐ Qiáng 李强, China’s new premier, reaffirmed the “two unwavering principles” (两个毫不动摇) policy (first enunciated at the 16th National Congress of the Chinese Communist Party in 2002) of developing the public sector economy as well as the private sector economy.

Using a boxing analogy, Li stated that there are four “punches” that the government needs to hit home to get the economy right: macroeconomic policy, domestic demand, reform and innovation, and preventing and defusing risks. Li promised a “new starting point” for a market-oriented, rule-of-law, and internationalized business environment.

China’s private sector has been under duress during much of the previous decade of Xí Jìnpíng’s 习近平 rule: After growing for almost a decade, the proportion of China’s largest companies that are privately owned has been falling since 2021. Xi’s opening speech at the 20th Party Congress in October 2022 contained 91 references to “security” and the fewest references to “market” and “reform” for a congress address since the 1980s.

Not everyone is impressed. As one Twitter user remarked (in Chinese): “It is useless for Li Qiang to shout slogans…Large and small leeks [i.e., individual and private sector investors], including foreign leeks, are not so easy to fool after repeatedly being flattened into pancakes.”

Baijiu output was down in 2022, but profits were up

According to the China Alcoholic Drinks Association, the 2022 national output of the distilled liquor báijiǔ (白酒) was 6.71 million kiloliters (1.77 billion gallons), a year-on-year decrease of 5.58%.

But less booze actually translated into more money: The total industry revenue was 662.64 billion yuan ($95.93 billion), and the total profit was 220.17 billion yuan ($32.01 billion), an increase of 29.36%. There are 963 nationally designated liquor enterprises in China, of which 169 were not profitable in 2022.

Beleaguered Gome had a terrible 2022

Gome Retail announced on Friday that it is going to announce poor results for 2022.

Sales revenue for the year will show a decline of up to 65% year-on-year, and the company will declare an annual loss of up to 19 billion yuan ($2.75 billion).

In August 2022, 18 months after charismatic founder Huáng Guāngyù 黄光裕 stated that he would restore Gome to its former glory “in 18 months,” the company reported a net loss of 2.96 billion yuan ($429.09 million) for the first half of the year. At the time, the company blamed COVID lockdowns. Earlier in August, Gome laid off most of the staff of its online ecommerce platform and app.