After months of inexplicable delay, senior leaders from China’s governing Communist Party are meeting in Beijing this week to chart the course for the world’s second biggest economy, which is facing serious economic issues and tensions with the West.
The gathering, known as China’s third plenum, has significant stakes. It occurs every five years. It has traditionally served as a venue for the party’s leadership to propose major economic changes and policy directions.
China is dealing with a housing market crisis, excessive local government debt, and low consumer demand, as well as declining investor confidence and rising trade and technological disputes with the United States and Europe.
The latest economic growth figures, released on Monday, highlighted these issues. China’s gross domestic product increased by 4.7% from April to June compared to the previous year.
This is a deceleration from the 5.3% growth recorded in the first quarter, and it also falls short of the estimates of a group of analysts surveyed by Reuters, who projected a 5.1% increase in Q2.
Economic troubles caused by years of rigorous government controls have fueled societal discontent and raised concerns about the country’s future under Xi Jinping, its most powerful leader in decades.
Those concerns have been heightened by a recent shake-up in Xi’s government, which saw three ministers and a handful of top military officers removed from their positions or investigated, a situation that some observers of China’s opaque political system believe contributed to the plenum’s delay.
How Xi and his senior officials solve China’s economic issues will effect their ability to improve the country’s quality of life and public trust.
They may also have a wide influence on the country’s position in the global economy and how eager foreign investors are to conduct business there while uncertainties, such as the result of the impending US presidential election, loom.
Here’s what to anticipate from the four-day event, which starts on Monday.
Big changes?
According to state media, some 200 members of the party’s Central Committee leadership body and 170 alternate committee members are meeting in Beijing to adopt a paper outlining a strategy for “deepening reform” and achieving “Chinese-style modernization.”
Previous third plenums have accomplished significant improvements.
The 1978 conference was associated with the historic turn towards “reform and opening” of China’s economy, while Xi’s first third plenum as leader in 2013 put in motion the drive to abolish the decades-old one-child policy.
However, watchers of China’s opaque political system do not expect major economic changes this time around.
Instead, they will be looking for more focused initiatives to solve fundamental economic and social challenges, as well as to strengthen China’s technical self-reliance at a time when it is facing a slew of US-imposed technology access restrictions.
This is Xi’s third time presiding over this congress, having extended his leadership into a norm-breaking second decade during the last Party Congress in 2022.
The conference, which was widely anticipated to take place last autumn, has sparked speculation as to why it is just now taking place.
Some analysts speculated that the slowing economy and internal disagreements over how to solve it, as well as high-level personnel shake-ups that threw a pall over Xi’s third term, may have played a role.
Economic problems.
Local governments’ large debt burdens and falling incomes, along with a protracted property sector crisis, are at the root of China’s present economic troubles.
They will also be searching for signs of a new path for real estate development and property sector regulation in the aftermath of the industry crisis, which has seen hundreds of Chinese developers fail on their obligations, devastating investors, homeowners, and construction workers.
Observers will be looking for fiscal changes, particularly in taxes and government expenditure, that might alleviate pressure on local governments and increase income.Many people believe the government should take steps to boost consumer spending and household income, such as reforming rural land ownership and China’s restrictive household registration system, as well as expanding social safety nets in a country dealing with high medical costs and an ageing population.
Xi recognised China’s economic misery, stating in a New Year’s address that “some people” had “difficulty finding jobs and meeting basic needs.” In a May address, he also said that the party should “do more practical things that benefit the people’s livelihood,” and that change should provide people with a feeling of “gain.”
While pursuing rapid economic growth is “no longer Beijing’s singular priority,” Asia Society Centre for China Analysis experts Neil Thomas and Jing Qian wrote last week, Xi likely recognises that his priorities of national security and technological self-reliance “must co-exist with a baseline level of growth that sustains consumption, investment, social stability, and his own political security.”
(CNN)
