The 20th Third Plenary Session of the Chinese Communist Party once again raised the issue of deepening reform, but foreign media analysis suggests that this is merely a rubber stamp transition and unlikely to bring significant changes to the struggling Chinese economy.
According to CCTV, the 20th Third Plenary Session of the CCP was held in Beijing on the morning of July 15th. CCP leader Xi Jinping delivered a work report and provided explanations on the “Decision of the Central Committee of the Communist Party of China on Further Comprehensive Deepening Reform and Advancing Chinese-style Modernization.”
Mainland state media stated that the focus of the Third Plenary Session is to further comprehensively deepen reform and promote Chinese-style modernization. Xinhua News Agency described it as comprehensive and unprecedented reform. The Global Times noted that the policies focusing on reform were the key discussion points. An article in the People’s Daily mentioned the reform and opening up in the new era, referencing terminologies used by Deng Xiaoping.
BBC business journalist João da Silva wrote that the Chinese economy stumbled in the second quarter of 2024, with the world’s second-largest economy facing ongoing challenges such as a real estate crisis, risky local government debts, weakening consumer demand, and high unemployment. At this critical moment, top CCP officials are convening in Beijing, possibly to discuss the economic slowdown. Thus, there are expectations surrounding this Third Plenary Session.
However, observers are uncertain whether this session under the strengthened centralization of CCP leadership will present bold initiatives and room for discussions. Some analysts view this session as a mere rubber stamp event to announce predetermined policies, casting doubts on whether rapid economic recovery measures will be introduced.
The Wall Street Journal believes that the expectations for major policy adjustments at the Third Plenary Session are “low.” The report points out that China’s economic growth is slowing and becoming more imbalanced, with exports and massive investments in factories propping up the economy while other sectors languish. Consumers are cutting expenses, the real estate market remains sluggish, local government debts are soaring, foreign investments are exiting, and China’s population is rapidly aging. The Chinese economy is facing two severe and interwoven crises: the declining property market and the risks of trillions of dollars in local government implicit debts. Despite a range of rescue measures, they have yet to yield positive results.
The People’s Daily, the CCP’s official newspaper, warned in a recent editorial that “reform is not just a change in tune.” The Financial Times suggests that this signals an adjustment rather than a big bang reform, leading to concerns of disappointment among investors regarding potential changes from the Third Plenary Session.
According to the Financial Times, many wealthy individuals in China are leaving the country as an economic gloom envelops the nation!
The report states that China’s economic growth in the second quarter stagnated at 4.7%, a significant drop from 5.3% in the first quarter, bringing the giant Asian nation’s half-year growth rate to 5%, meeting but falling below the CCP regime’s target. Retail sales in June plummeted to 2%, marking the weakest performance since December 2022, while industrial production weakened from 5.6% the previous month to 5.3%.
The report also notes that real estate prices continue to decline in major Chinese cities, confirming the long-standing stagnation of the real estate industry that has been an engine of economic growth, despite some supportive measures taken by the authorities. While there are signs of recovery in the catering, tourism, and leisure industries, Chinese households are tightening belts, delaying non-essential purchases and real estate investments, reflecting the prevailing dim outlook since the unsealing.
The report quotes Bert Hofman, former head of the World Bank’s Beijing office, as saying, “We are seeing very low consumer and investor sentiment. Many wealthy Chinese are leaving the country. There is a lot of uncertainty in economic strategy.”
The 20th Third Plenary Session of the CCP was originally scheduled to take place last autumn but was inexplicably postponed. Analysts believe that this unusual nine-month delay in holding the conference exposed internal disagreements over Xi Jinping’s “guiding ideology.”
Nevertheless, analysts continue to closely monitor the signals that the post-session communiqué will convey.