【Epoch Times, August 29, 2024】 The Mainland Affairs Council of the Republic of China released highlights of the Consultation Committee Meeting on the Political and Economic Trends in China after the Third Plenary Session of the Chinese Communist Party. One member of the committee warned that under the increasing pressure from Western countries to contain the Chinese Communist Party, China may engage more frequently in talent poaching and the theft of core technologies from Taiwan.
The Mainland Affairs Council of the Republic of China recently held its 60th Consultation Committee Meeting on the theme of “Political and Economic Trends in Mainland China after the 20th Third Plenary Session of the Chinese Communist Party”. On the 28th, the Council published the highlights of the meeting on its official website.
Scholars pointed out that after the 20th Third Plenary Session, the Chinese Communist Party intends to advance “Chinese-style modernization” and develop “new productive forces”. However, China’s economic transformation faces many challenges such as aging population before affluence, regional imbalances in development, increasing risks in real estate and local debts, as well as growing environmental pressures. In terms of technological innovation and industrial upgrading, the Chinese Communist Party is still struggling with shortages of research talents and constraints on core technologies.
Some committee members noted that the Third Plenary Session did not present specific economic stimulus measures as expected by the outside world. This could be related to uncertainties from the upcoming US election, allowing for the flexibility to retain policy tools. The key to China’s economic development lies in market liberalization, but the Chinese Communist Party prioritizes national security over economic development, showing a clear leftist ideology. In recent years, the Party has established the Central Committee for Science and Technology, with political aides often lacking research backgrounds, raising concerns about non-experts leading experts.
Analyzing the focus on developing “new productive forces”, some committee members expressed concerns that excessive subsidies could lead to overcapacity issues. China’s technology industry is still in the stage of imitation and improvement compared to foreign countries. To achieve groundbreaking technological inventions, a free market environment and access to technology and funds from the international market are crucial. However, according to statistics from the Chinese State Administration of Foreign Exchange, FDI net outflows from foreign investors to the mainland amounted to $14.8 billion in the second quarter of this year, showing a continuous decline in recent years, which may hinder China’s technological innovation and transformation.
Regarding employment in China, some committee members suggested that the actual unemployment situation in China may be more severe than what is reported by the National Bureau of Statistics. The employment of migrant workers is not reflected in urban employment statistics. In deteriorating job markets, people’s incomes decrease, leading to wage cuts, labor disputes, and wage arrears, weakening consumer confidence and consumption growth, and increasing social discontent, which is detrimental to social stability in mainland China. China’s past rapid growth relied heavily on massive infrastructure and repeated investments, but ineffective and excessive infrastructure development has worsened local fiscal conditions, failing to bring substantial benefits and causing financial strains.
On the real estate side, some committee members believe that the Chinese Communist Party’s requirement for state-owned enterprises to use loans from state-owned banks to purchase unsold houses from developers will lead to a rise in non-performing loans. This practice may result in a surge in bad debts, a decrease in net interest margins, and a deteriorating profitability for the banking industry, potentially escalating financial systemic risks related to the problems in the real estate market.
Furthermore, some committee members caution that countries like the United States and the European Union are less likely to tolerate China’s violations of WTO rules, such as government subsidies to industries, and other interventions in the free market. Counteractions and containment measures against such behaviors are expected to become stricter. As tensions escalate between China and Western countries in economic and trade relations, the frequency of talent poaching and core technology theft from Taiwan may increase. Taiwan should avoid becoming a breach for the outflow of democratic camp’s technology and talent. Regarding China-Taiwan economic and trade relations, it is expected that China will maintain a dual approach of carrot and stick measures towards Taiwan. Taiwan should carefully monitor possible economic and trade pressures and coercive actions from the Mainland.