Li Keqiang sees China’s future in the coffee shops of Zhongguancun

27 June 2019

So there is at least one place in Beijing where Premier Li Keqiang feels at home. After scolding yet more time-wasting, red tape wielding, bureaucrats in his regular State Council meeting this week, Mr Li headed up the Third Ring Road to have coffee with a group of young entrepreneurs in Beijing’s hi-tech hub, Zhongguancun.

These are the kind of people Mr Li sees as the future of China; people who can create new products, services and jobs; people who will help drive the economy forward during the era of the “new normal.”

"Entrepreneurship is not a privilege of a small number of people but the choice of many," Mr Li told his new friends at the 3W Cafe. And he was willing to back up his words with actions. At the same time as Mr Li was touring the hi-tech companies of “Inno Way,” the State Administration of Taxation announced a raft of new tax relief measures for emerging industries such as e-commerce.

Premier Li Keqiang chats with young entrepreneurs at the 3W Cafe. Photo China Daily.

Known as China’s Silicon Valley, Zhongguancun started life back in the 1980s as a handful of computer shops dotted along the dusty streets linking Tsinghua, Beijing and Renmin Universities. Today, it is home to thousands of new start-up companies at the cutting edge of technological innovation. There is no doubt that Zhongguancun has been a major success story but there is a danger that Mr Li and his colleagues in the Chinese government are getting a little too carried away with the cult of entrepreneurship.

Two weeks before Mr Li’s visit, Finance Minister Lou Jiwei was giving a speech just up the road in Tsinghua University in which he too banged the entrepreneurial drum and suggested that China’s labour laws had now become major impediment to the spirit of innovation. In particular, he blamed the 2008 Labour Contract Law for slowing down the free flow of labour; In other words, making it difficult for companies to fire workers.

This is the kind of talk we should expect from business people but when the Finance Minister of a so-called Communist government says it, we should begin to worry; not least because it is obviously not true. The government’s own survey of rural migrant workers, released last week showed that, six years after the Labour Contract Law went into effect, only 38 percent of migrant workers had actually signed a labour contract with their employer, and only around 17 percent had a pension, as required by law. Clearly, if the laws are not being enforced, they cannot be an impediment to business.

It sounds like Mr Lou wants to get back to the good old days when bosses could hire and fire workers at will. What Mr Lou needs to understand is that China’s workers are in a much stronger bargaining position than before and they will not allow the government to simply roll-back hard-won concessions on labour rights just because the economy is not growing quite as fast as it used to.

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