As China’s first premier with a bachelor’s degree in law and also a PhD in economics, both from the prestigious Peking University, Li took on the mission to correct the economic imbalance caused by the implementation of a 4 trillion yuan (US$572 billion) stimulus package in 2008, which was used by his predecessor in an attempt to manage the global financial crisis.
The year Li was sworn in as premier, Beijing approved the historic reform document, which vowed to let the market play a decisive role in the allocation of resources and also detailed a reform road map.
The economy continued to expand, despite a slower pace of an average of between 5 and 6 per cent in the past decade, to approach the threshold of a high-income country.
Speaking at the National People’s Congress in March 2022, he vowed that “China’s opening-up policy would not change, just as the course of the Yangtze and Yellow rivers will not be reversed”.
Tao Jingzhou, a renowned lawyer and university classmate, said on Friday that Li’s support for economic reforms and opening-up came from the bottom of his heart.
Some of his policies, though, were shelved as President Xi Jinping consolidated his grip over the Communist Party and the government.
The world’s second-largest economy has been tilting more towards security since the start of Xi’s second term in 2018, as the president prioritised anti-corruption, environmental protection, national security and coronavirus controls, often over economic development.
Beijing also had to deal with the trade war launched by the Trump administration, which pushed China to adopt a so-called dual circulation strategy of relying more on the domestic market and technology for growth amid the US curbs.
“Events derailed some of [Li’s] agenda in the past 10 years, but his thinking is still very much relevant today,” said Bert Hofman, director of East Asian Institute at the National University of Singapore.
“Li always struck me as very committed to China’s development, intellectually curious, with a highly sophisticated understanding of the Chinese economy and how China could learn from international good practice in economic management.”
A Chinese economist said the policy directions of Likonomics were not well implemented in Li’s early days in office as there was still massive stimulus for the property market.
“These visions only started to gradually implement in his second term, but it was also marred by the impact of the pandemic,” the person said on the condition of anonymity.
Victor Gao, vice-president of the Centre for China and Globalisation in Beijing, said the late premier also pushed “pretty hard” for tech innovation and “emphasised” the growth of fintech, and allowing firms to utilise the full extent of the law.
“His emphasis on the rule of law mattered a lot,” he said. “I think we’ll continue to move in that direction that he set out for the whole nation.”
Li was also devoted to delegating more power from Beijing, reducing government approvals and also bolstering the business environment.
Mei KTV founder Wu Hai wrote an open letter in 2015 criticising China’s business environment, eventually receiving a direct address from Li.
“The letter I wrote was printed and studied within the government and widely discussed in the state media, which set off a climax of improving the business environment at that time,” said Wu, who described Li as a “very admirable leader” with a “big heart”.
“In the following two years, the State Council office came to me many times to follow up on the business environment matters I mentioned, which shows that [Li] really paid attention to every detail.”
Former American Chamber of Commerce in Shanghai president Ker Gibbs called Li “a pragmatist, and highly competent”.
“He had no axe to grind in dealing with the West. There was a group of leaders who foreign businesspeople were disappointed to see were left with no formal role in the new government. Li would have been high on that list,” added Gibbs, who is now an executive-in-residence at the University of San Francisco.
Before becoming premier, Li had been known for his so-called Li Keqiang index, which adopted a combination of indicators – including railway cargo volume, electricity consumption and bank loans – to take the pulse of China’s often opaque economy.
“Li’s approach made sense for China, and was generally acceptable to the global community, although the pace of economic reform under Li was slower than most foreign trading partners would have liked,” said James Zimmerman, former chairman of the American Chamber of Commerce in China.
He said bucking the opaque system and challenging the “man-made” numbers used by the government to pump-up gross domestic product figures was one of Li’s biggest achievements.
“He led an internal challenge that questioned the misleading data that was coming up from internal sources that clouded reality. It takes a lot of courage to publicly challenge the system,” added Zimmerman.
During the coronavirus pandemic, when China was fixated on a zero-tolerance approach, Li delivered several honest assessments of the economic situation that resonated with the general public, while he also pledged to stabilise the economy.
“It’s barely enough to cover monthly rent in a mid-sized Chinese city. Now we are encountering a pandemic. After the pandemic, people’s livelihood should be the priority,” Li said in Beijing at the time.
And during the two-month long stringent lockdown of Shanghai in 2022, Li convened a video conference with more than 100,000 local government cadres and instructed the officials to use whatever resources they had to stabilise the economy.
“Now there is a danger that China’s economy will slip out of a reasonable range,” Li told the meeting in May 2022.
“For such a large economy, once its growth slips out of a reasonable range, it would take a huge price and a longer time to bring it back, and it would be very difficult to do.”
Chen Chien-fu, director of Graduate Institute of China Studies at Taiwan Tamkang University, said the efficacy of Li’s reform agenda remains uncertain as China grapples with economic challenges and navigates a period of economic downturn.
“As the nation stands at this critical juncture, we must await further developments to discern the trajectory of China’s economic and political evolution.”
CEIBS’ Zhu said that, although China does not subjectively deny the market-oriented reforms and opening up, fixations on security concerns have interfered with the overall economic policy direction.
“The goals in the future need to be clear, that economic development should be given the top priority,” he added.
Additional reporting by Wendy Wu, Frank Tang, Ralph Jennings and Frank Chen