What to expect at the Chinese Communist Party's most important meeting of the year

With China grappling with a housing crisis, high youth unemployment, plummeting business and consumer confidence and a sea of ​​local government debt, one might expect the government to pull out all the stops to pull the country out of its economic doldrums. But a meeting of China’s top leaders this month is expected to propose a very different set of reforms.

Rather than focusing on China’s current problems, the Third Plenum of the Communist Party of China (CPC) Central Committee—so called because it is the third session of the committee’s five-year term—will prepare China for a confrontation with the United States by building industries fueled by massive investments in cutting-edge technology. The agenda is aimed at strengthening the party’s grip on Chinese society and paying tribute to top leader Xi Jinping, whose policy blunders range from zero COVID-19 lockdowns to a repression The moves by major online companies have caused economic malaise. They also underscore China's shift away from its long-held economic strategy of growth for growth's sake.

Among the policies expected to be announced at the July 15-18 plenum (which inexplicably took place delayed from the end of 2023) will be reforms restructuring fiscal and budgetary policies, as well as greater coordination regional economic development. Both policies will strengthen the central government's role in guiding development. There will also likely be statements of support for China's struggling private sector, which accounts The country accounts for more than 60% of gross domestic product and more than 80% of urban employment. But Xi and his subordinates have stressed that the political pendulum is swinging firmly toward statist solutions.

This strategy will offer little relief to a population struggling to make ends meet and to businesses that have lost the will or the means to invest. Beijing is seeking what it calls a high-level socialist market economy based on new quality productive forces will be fueled by Xi's desire to see the Chinese people, especially its young peopleeat bitterness in pursuit of national ideals. Government resources are devoted to research and development and industrial subsidies, not to social programs.

It is no surprise that as the plenum approaches, Chinese media have renewed their calls for common prosperity and a Mao Zedong-era egalitarian system. slogan Xi Jinping returned to the forefront during the 2021-22 crackdown on online conglomerates. Although that campaign was later relegated to the background, the party-led campaign People's Daily June 24 published a full page article firmly promote common prosperity in high-quality development (originally reported by the Sinism (blog) and a contribution from the Secretary-General of the Chinese Academy of Social Sciences, which advocates that China resolutely abandon the erroneous tendency to give priority to capital and material. [and] Money first.

This is a far cry from the speech of the late leader Deng Xiaoping. call Nearly five decades ago, the Chinese government decided to let some people get rich first. This is also a clear departure from the historical directives of previous Third Plenums that heralded market-oriented economic policies. Deng’s turn to Maoist class struggle and modernization came at the Third Plenum in 1978. His support for China’s full opening to the global economy was the theme of the 1993 meeting. And even Xi’s first Third Plenum in 2013 called for over three hundred market-related reforms (most of which were market reforms). never implemented).

Since then, however, the ideological trend has changed. The 2018 plenum endorsed the removal of term limits for CCP general secretaries, allowing Xi to hold power indefinitely and signaling a marked shift in policy direction. Recent CCP speeches and articles have used Marxist-Leninist jargon to justify the new statist policies and endless criticism. renting Xi Jinping, but the propaganda boils down to increased government control over the economy.

Beijing justifies this policy change as being necessary due to national security concerns, or what the State Council, in announcing The plenum called for increasingly fierce international competition with the United States and its allies, which are tightening controls on the flow of technology and capital to China. As a result, Beijing is to prioritize high-level technological autonomy, investing tens of billions of dollars in research advanced semiconductors, quantum computingnew types of renewable energyand many other areas. This high-yield industrial policy involves the government supporting state-owned enterprises and picking winners among private companies to achieve rapid growth in a single-minded pursuit of technological progress, as Arthur Kroeber wrote in a recent Brookings Institution paper paper.

Chinese officials are certainly saying they are ready to tackle the current economic woes, and the plenum will likely make loud statements about their intention to tackle the housing crisis and the decline in business confidence. But while Beijing has been talking for months about a new housing model and the need to expand domestic demandThere is little sign of major steps to pursue these goals. Instead, the plenum will push the reform fiscal and budget policies. This will aim to channel more money to heavily indebted provinces, cities and counties, whose main source of cash land sales has dried up due to the housing crisis. With the struggling economy and taxes income If it falls, Beijing will struggle to make up the difference, even if more central government resources are expected to be shared with local governments. Ultimately, a newly empowered bureaucracy could end up crushing citizens, especially if, as Xi has done, consideredLocal authorities must bear part of the burden of supporting new technologies and new industries.

The plenum is also expected to announce measures to ease restrictions on the movement of Chinese citizens from rural to urban areas, thereby providing new opportunities for millions of people who have missed out on the country’s growth. But Beijing does not appear to have policies to create jobs for them. Nor is it taking adequate measures, whether social programs or fiscal stimulus, to boost consumption and help those feeling the pinch of youth unemployment. lower income, falling real estate prices, downsizing of the companyand a struggling stock market. A highly touted product effort Subsidies for the purchase of new cars and household appliances have fallen flat.

China has clearly decided to devote all available resources to next-generation technologies, while neglecting to support the vast majority of the population that survives outside the tech sector. This suggests that Xi Jinping will end up with shiny new industries built on shaky economic foundations.

---

Jeremy Mark is a senior fellow at the Atlantic Center for Geoeconomics. He previously worked for the International Monetary Fund and the Asian Wall Street Journal. Follow him on X: @JedMark888.

Further reading

Thu, June 13, 2024

A Global South with Chinese Characteristics

Report
By
Niva Yau

China's Ministry of Commerce has sponsored overseas training programs on trade, computer security technologies, and more. Beijing uses these training programs to defend its authoritarian capitalism. Does it work?

Image: Seven members of the Chinese Communist Party leadership, including President Xi Jinping, are elected after the Communist Party congress at the Great Hall of the People in Beijing, China, October 23, 2022. Xi Jinping, 69, ignored the customary retirement age and began an unusual third term as general secretary of the Communist Party of China (CPC) and chairman of the Central Military Commission (CMC). Koki Kataoka/The Yomiuri Shimbun via Reuters Connect.