Before the Third Plenary Session of the Chinese Communist Party, the state-run media has been hyping up the leader’s catchphrases in an attempt to create hopes for significant policy initiatives at the upcoming meeting. However, various sources indicate that both domestic and international observers believe the conference will be unremarkable.
The top leadership of the Chinese Communist Party will convene a secret economic policy-making meeting in Beijing next week from July 15th to 18th, known as the Third Plenary Session.
So far, it is anticipated that the agenda of the meeting will cover topics such as green energy industry, advanced manufacturing, fiscal and social welfare reforms, reform of the Chinese Communist household registration system, and boosting confidence in the private sector.
According to a report by the Financial Times on Thursday, June 11th, most observers believe that the Third Plenary Session is unlikely to hint at or introduce any strong policies.
“We should not have high expectations for the Third Plenary Session,” a prominent economist from a Chinese government think tank told the Financial Times. The economist stated that the market has already anticipated that the outcome of the conference will be unimpressive.
Since the outbreak of the pandemic, the Chinese economy has been struggling to recover, with household consumption, private investments, and inflow of foreign capital remaining sluggish.
The Financial Times reported that analysts from Jiafulongzhou stated in a research report, “Fundamentally, this plenary session will not deviate significantly from the course set by Xi Jinping.” The analysts believe that there is no indication that the Chinese government will reduce its role in the economy, as Beijing still aims to “guide resource allocation to achieve the policy objectives of industrial upgrading and technological innovation.”
The latest analysis report on the Third Plenum by the Asia Society Policy Institute (ASPI) suggests that while recent speeches by the Chinese party leader hinted at a slight relaxation of commercial policies towards high-tech companies, “he does not want to loosen control over entrepreneurs and the market; he wants to use them to develop technology and promote manufacturing, making them operate more effectively under the Party’s guidance and supervision.”
The report mentions that reducing risk loans and excessive leverage in the real estate market could be a major priority for Beijing at this meeting, but any significant reforms are likely to progress slowly.
Currently, the largest local debt risks are borne by local governments, which have been struggling due to the downturn in the real estate industry and costly Covid pandemic control measures, as they provide most services but do not receive sufficient tax revenue.
Additionally, the report suggests that Beijing may announce cuts to the negative list for foreign direct investment and provide more commercial incentives in free trade zones.
In conclusion, the report states, “Actions speak louder than words, and politicians often like to make promises. The devil will be in the details of subsequent laws, regulations, and policies. Xi hopes to assess his subordinates according to his economic agenda and decide whether to penalize or promote.”
Chinese Premier Li Keqiang’s speech at the Summer Davos Forum in Dalian earlier, in an effort to attract investment, has led to a 1.6% drop in the Shenzhen and Shanghai stock indices.
Amid efforts in Hong Kong to seek economic recovery after three years of pandemic control and to address the increasingly challenging geopolitical environment, in March 2024, prominent Hong Kong tycoon Chen Qizong stated in a public letter to shareholders that for most companies, it is now a time for “survival and protecting assets,” rather than development.
“There are too many known and unknown risks, making it impossible to adopt an expansionist posture,” Chen Qizong said.
Former chief editor of the South China Morning Post, Wang Xiangwei, wrote on Substack that both domestic and foreign investors and entrepreneurs have heard too many lofty slogans over the past four years but have not seen practical measures to promote private economy and market forces, leaving them still very pessimistic.