The 20th Third Plenary Session of the Chinese Communist Party (CCP) opened today in Beijing, lasting for four consecutive days. Prior to the event, the official emphasis was on “comprehensively deepening reforms,” while stressing the “party’s overall leadership.” Some analysts suggest that fiscal and tax reforms may be a major focus of discussion. However, overseas experts believe that these are just minor skirmishes, and in the current context of the CCP facing internal and external crises, the effects of the Third Plenum may turn out to be negative.
Originally scheduled for last autumn, the Third Plenum was postponed for half a year before finally taking place. As is customary, CCP leader Xi Jinping will report on the work of the Political Bureau to the Central Committee, with over 370 Central Committee members, alternate members, and more in attendance. The venue for the meeting is typically at the Jingxi Guesthouse.
According to the CCP Political Bureau meeting on June 27th, the Third Plenum will deliberate on the CCP Central Committee’s decision to “further comprehensively deepen reforms and promote Chinese-style modernization.”
Leading up to the meeting, two CCP official media outlets, People’s Daily and Xinhua News Agency, published articles on “comprehensively deepening reforms.” Mainland Chinese economist Ren Zeping wrote an article on Sina.com suggesting that the meeting is expected to cover new quality productivity, fiscal and tax system reforms, financial reforms, marketization of factors, and state-owned enterprise reforms as key points.
Currently, China is facing economic challenges such as a real estate crisis, high youth unemployment, declining confidence among enterprises and consumers, and a sharp increase in local government debt. Externally, there are changes in the international trade environment and escalating tensions in international geopolitics. What do overseas experts who have long studied CCP political and economic issues think?
Associate Professor Feng Chongyi from the University of Technology Sydney in Australia told Epoch Times that since 1978, the CCP has introduced some reform measures during the Third Plenum, and Xi Jinping also made announcements on reform during the 18th Third Plenum, but they were not implemented. With significant economic problems in China currently, a severe downturn, the business community hopes for new policies to rescue the Chinese economy, but instead, the CCP’s response seems to be moving in the opposite direction.
Feng Chongyi pointed out that Xi Jinping has mentioned on different occasions the need for greater reform and openness, so the recent declarations of these measures seem more geared towards meeting or responding to societal expectations.
“However, the policies that have been announced so far are actually reforms in the opposite direction. For example, instead of further privatizing land, they want to strengthen collective economy in rural areas; in the financial sector, they are not liberalizing finance but strengthening central government control over finance, and even closing down financial institutions of state-owned enterprises, so they are moving in the opposite direction.”
Feng Chongyi believes that the reforms the authorities can make are just minor skirmishes.
“In terms of fiscal and tax reforms, it’s just minor skirmishes, such as the types of taxes between the central and local governments, the division of tax responsibilities and authorities, introducing some new measures. Then there are also measures related to urban management and other aspects of social governance, introducing some new measures, but compared to those national security laws and anti-espionage laws enacted in recent years, there is simply no comparison.”
Feng Chongyi said that the major security policies of the CCP and the big framework make Chinese society more closed.
Researcher from the Cross-Strait Policy Association and Taiwan think tank advisory committee member Wu Sezhi told the Epoch Times that the delay of the Third Plenum for nearly a year before being held can explain the problem, any economic proposals or policies put forward by the CCP now are unlikely to have a significant impact. Expectations or anticipation for the future development of the Chinese economy in the market will inevitably decline.
“The current internal and external economic environment in China is no longer as good as before. We see recent signs of weak investment, weak consumption, and a continuously rising unemployment rate.”
Regarding the external environment, Wu Sezhi said that the international community is adopting derisking measures, which could have a certain impact on the Chinese economy. “So, in such a challenging economic situation, both internally and externally, trying to achieve a so-called counter-trend reversal or bottoming out bounce through a Third Plenum, I think the difficulty is very high.”
In fact, not only is there generally low expectation from overseas opinion for the conference to announce significant economic reforms, but there is also such sentiment within the CCP system itself.
Yao Yang, an economics professor at Peking University’s National Development Research Institute said in a speech in June that many people have high hopes for the Third Plenum, expecting another round of reforms and big moves. However, “I tell you, what you are expecting is taken for granted, and the vital reforms in China were completed in the 1990s. What we need to do now is not further reform, but to consolidate the achievements of the 1990s reforms.”
He stated, “Reform and opening up have been ongoing for 40 years, and after 2018, we call it the new era. The main task of the new era is to correct the problems arising from the second 20 years of reform and opening up.”
Premier Li Keqiang, identified as the executor of Xi’s economic policies, spoke at the “Summer Davos” in Dalian in June 2024, saying that China’s economy in the post-pandemic recovery period needs to “nurture its roots and cultivate its foundations” and it is not the time for “strong medicine.” His statement of “cannot resort to strong medicine” was suppressed by the CCP, sparking speculation about whether the Third Plenum will bring significant measures.
The CCP announced early on that the Third Plenum would “integrate the party’s leadership into all aspects of reform.”
Feng Chongyi analyzed that the CCP’s reform and opening up in 1978 actually entered a post-totalitarian phase, but now it is reversing.
“Mao Zedong’s totalitarian rule reached its peak during the Cultural Revolution. After Mao’s death, the power of the top leader was reduced, moving towards collective leadership. Then, in terms of the economic route, it shifted from class struggle to focusing on economic construction, simplifying governance, opening up the party’s comprehensive control over society, and opening up a small space relative to society, and also opening up to the international community, foreign capital, and foreign trade, integrating into the world’s economy. Now, strengthening the party’s leadership is moving in the opposite and contradictory direction.”
Wu Sezhi said that relying on foreign investment to promote economic development has been a crucial strategy for the CCP from the reform and opening up to now. The current authorities particularly emphasize party leadership, and have introduced many related bills or laws to safeguard the party, which has made foreign investors feel uneasy and led to their withdrawal.
He believes that in contrast to the possibility of some opening policies that the Third Plenum may put forward, under the prioritization of politics over the economy, the so-called opening policies will be more in word than in deed.
“The general public hopes to improve the current economic problems, but Xi Jinping’s development path, to a certain extent, completely contradicts the market economy. So, I think the future development will be negative, and the Third Plenum can only have a negative impact.”
The consultancy firm Rongding Group recently published an article stating that the Third Plenum is not the place to propose detailed policy recommendations or short-term economic stimulus measures. The institute pointed out that the key issue of the Third Plenum is whether Beijing can demonstrate to the outside world that it can integrate these reform measures into a coherent plan to quickly reverse the downward trend of the Chinese economy.
Xi Jinping, at the National Science and Technology Conference on June 24, 2024, proposed building a technologically strong nation by 2035. On June 25, 2024, Vice Premier Ding Xueyang made his first appearance as the head of the Central Science and Technology Commission, emphasizing the strategic goal to anchor the building of a technologically strong China by 2035 and promote technological innovation through a new national system.
Wu Sezhi observed Xi Jinping’s economic path, primarily characterized by two aspects. The first is emphasizing self-development, including self-sufficiency in technology, but given the energy and technical difficulties that China currently faces in technology, it presents challenges. The second aspect is Xi Jinping emphasizing regime security as a top priority by emphasizing national security through legislation. However, “These two trends are completely opposite to the past economic development model in China and do not align with current global development.”