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China’s Third Plenum begins with call to ‘push forward modernisation’

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Chinese Communist Party officials are gathering in Beijing from Monday to Thursday for the third plenary session of the 20th Central Committee, also known as the Third Plenum.

China’s state-run Global Times wrote that they are watching to see how the meeting will “set priorities for comprehensively deepening reform, draw up a blueprint for long-term economic development and open a new chapter in the country’s march towards Chinese modernisation”.

The meeting comes at a critical time for China’s economy, with policymakers grappling with an ongoing property crisis and sluggish domestic demand, as well as trade barriers and geopolitical threats from the West. On Monday, China released gross domestic product data for the second quarter, with growth coming in below forecasts at 4.7 per cent.

What is the Third Plenum?

The Central Committee of the Communist Party, comprising around 200 senior members and headed by President Xi Jinping, is a key decision-making body in China’s political system. It holds a total of seven plenary sessions, or plenums, in Beijing during its five-year term. The meetings produce documents that shape the country’s policies for years to come. The current Central Committee was elected in 2022.

The Third Plenum is closely watched because of its historic influence on economic policy. It was here that Deng Xiaoping announced his historic “reform and opening up” initiative in 1978. In 1993, the plenum endorsed the socialist concept of a market economy.

What is the procedure?

After discussions at the meeting, a statement is voted on and usually adopted on the day the meeting ends, and a full document detailing the decisions is usually published a few days later. A draft of the document was unveiled by the Politburo, the party’s top leadership body, state media reported in June. The title of the draft gave a hint of what was to come: “Deepening reform more comprehensively and pushing forward Chinese-style modernisation”.

The main topic of the meeting

There was no official announcement about the timing of the session. Observers had expected the third plenary session to be held last autumn. Instead, state media reported in April that it would be held in July. This led to speculation that the meeting had been postponed to allow time for basic policy decisions to be made.

The previous third plenum in 2018 focused on reforming party and state institutions rather than the economy, but this week’s meeting is expected to focus on the economy.

“This is the first third plenum in 11 years whose main theme is economic reform,” said Hiroya Yamauchi, a China and Asian markets expert at Nikko Asset Management in Tokyo.

At a meeting of the Political Bureau of the CPC Central Committee chaired by Xi Jinping, general secretary of the CPC Central Committee, in June, it was noted that the upcoming plenum will mainly focus on issues related to deepening reform more comprehensively and pushing forward China’s modernisation, according to Chinese state agency Xinhua.

Next year the government is due to update its five-year economic plan, and the meeting is also important in the context of these plans.

The economic plenums are also seen as an opportunity to explain China’s strategic goals to the world.

A key priority for Xi Jinping is to achieve scientific and technological self-sufficiency. China has made great strides in areas such as electric vehicles and batteries, and is investing heavily in building its own semiconductor supply chain. Xi has often called for the development of “new quality productive forces” at meetings, and this is expected to be on the agenda of the communique.

The meeting is also seen as an opportunity to restore economic confidence among businesses and investors. Although the economy grew by 5.3% in the first quarter, consumer demand has yet to recover from the economic impact of the COVID-19 pandemic.

China’s consumer confidence index fell from over 120 in February 2022 to 86.7 in April that year, and has remained below the pessimistic threshold of 100 ever since.

“External pressure is increasing … and it is necessary to realise that Western developed countries will continue the policy of protectionism, destruction of production chains and creation of technological barriers [targeting China] for decades to come,” Alexander Lomanov, deputy director of scientific studies at the Primakov National Research Institute of World Economy and International Relations of the Russian Academy of Sciences, told the Global Times.

Lomanov added that it was therefore important for the Third Plenum to draw up a high-level blueprint for the country’s economic course and updated reform priorities. Lomanov also suggested that China should speed up reform and opening-up measures to overcome numerous challenges, such as redoubling efforts to open up to the outside world and expanding the circle of new partners.

What do companies and investors expect?

Some are hoping for major stimulus measures to boost domestic consumption. Of particular concern is the property sector, where the decline in new and existing home prices accelerated in May despite measures such as incentives for state-owned enterprises to buy unsold homes.

There is no official indication that this issue will be addressed at the Third Plenum. A related issue that economists say may come to the fore is tax reform. For example, allocating more tax revenue to local governments, which have traditionally relied heavily on land sales, could help contain the property crisis.

On the other hand, experts believe that the third plenary session will focus on longer-term policies.

Political observers are also watching the reshuffle. Former foreign minister Qin Gang and former defence minister Li Shangfu were removed from their posts last year as part of an investigation. Li was formally expelled from the party in June for taking bribes, while Qin is still a member of the Central Committee. However, everyone agrees that the meeting will focus on the economy in general.

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Chinese navy chief and top nuclear scientist expelled from legislature

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The chief of staff for the People’s Liberation Army (PLA) Navy, Vice Admiral Li Hanjun, and Liu Shipeng, the deputy chief engineer of the state-owned China National Nuclear Corporation, were removed from their positions in the country’s legislative body.

Li is the latest in a series of PLA generals and a handful of defense industry executives implicated in a widespread investigation within the military.

In a statement on Friday, the NPC Standing Committee announced, “The Navy Soldiers’ Congress has decided to remove Li Hanjun from his post as a representative to the 14th National People’s Congress.”

The Gansu People’s Congress also dismissed Liu Shipeng from his role as an NPC deputy.

Additionally, the Standing Committee revealed it had voted to remove Miao Hua, a former top general who previously oversaw the PLA’s ideological work, from the Central Military Commission (CMC), China’s highest military command body led by President Xi Jinping.

The removal of Li and Liu from their NPC memberships suggests they are facing serious disciplinary action.

China typically remains silent about purges within the military, and announcements from the NPC are one of the few indicators of such campaigns.

There is little public information available about Li and Liu, as both have worked in sensitive positions.

Before becoming the navy’s chief of staff, Li, 60, was the deputy director of the CMC’s Training and Administration Department. He was appointed to this role after serving for a year in the CMC’s Office for Reform and Organisational Structure.

In 2014, he was promoted to vice admiral upon his appointment as commander of the naval base in Fujian province, where Miao also spent a significant part of his career. At that time, he was the director of training at the China Naval Command College and was soon promoted to president of the school.

According to official media reports, nuclear scientist Liu was born into a family that “served China’s nuclear dream for three generations.”

As the deputy chief engineer at CNNC, which oversees all aspects of China’s civil and military nuclear programs, Liu also served as the Communist Party secretary and president of CNNC’s “404 base” in Gansu.

Covering an area of over 1,000 square kilometers, the base was established in 1958 and is the country’s first and largest nuclear research center. It played a crucial role in the development of China’s first atomic bomb in 1964 and its first hydrogen bomb three years later.

This secretive base is still considered a key hub for China’s nuclear deterrence and nuclear industry.

According to statements from provincial authorities, Liu was named “Gansu’s outstanding entrepreneur” in 2023.

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China, US reach agreement on export controls

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The Chinese Ministry of Commerce announced on Friday afternoon that Beijing and Washington have remained in close contact since the two-day trade talks in London earlier this month, confirming the details of a framework agreement.

“China will review and approve export applications for controlled items in accordance with its laws and regulations, and the US side will, in turn, lift a series of restrictive measures against China,” the ministry stated.

“We hope the US side will cooperate with China in line with the important consensus and conditions established during the conversation between the two presidents on June 5,” the statement continued.

On Thursday, US President Donald Trump said the US had “signed” a trade deal with China the previous day, without providing details.

“We signed the deal with China yesterday, right? We signed the deal with China,” Trump said at a White House event introducing a budget law. “With the China deal, we are starting to open up China,” he added.

He also mentioned that a “very big” deal, likely with India, would be signed soon.

Rare earth elements

Following the event, US Commerce Secretary Howard Lutnick told reporters that the US and China had signed an agreement codifying the terms decided upon in previous trade negotiations.

“They will deliver rare earth elements to us,” Lutnick said in a televised interview with Bloomberg, adding that if this commitment is fulfilled, Washington will lift its “countermeasures.”

Rare earth elements, essential for producing high-tech products, including those for the defense industry, were a major point of contention in the trade talks. China holds a near-monopoly on the supply of these minerals due to its massive share of global refining capacity.

Responding to a question on Thursday about rare earth exports, ministry spokesman He Yadong said China had approved a “certain number” of applications and would “continue to strengthen” the review and approval process for eligible applications.

He added that Beijing is willing to “strengthen communication and dialogue” with other countries on export controls and actively promote appropriate trade.

Lutnick also stated that the US plans to reach agreements with 10 major trading partners in the coming weeks. The deadline for countries to negotiate trade terms before higher tariffs are reinstated was July 9, following a 90-day suspension of import tariff hikes announced on April 2.

The two negotiating teams concluded the London talks by announcing they had agreed “in principle” on a “framework” that both sides would take home for their respective leaders to review, as they sought to get their uneasy truce, signed last month in Geneva, back on track.

The negotiations began after a highly anticipated phone call between Xi Jinping and Trump, which seemingly ended an intractable stalemate.

In the weeks following the initial agreement in Switzerland, Washington claimed China was restricting exports of critical minerals, while Beijing reacted to US restrictions on semiconductors and threats to impose visa barriers on Chinese students.

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China hosts SCO defense ministers on warship amid regional tensions

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Chinese Defense Minister Dong Jun hosted his Iranian counterpart and other high-level defense officials from Shanghai Cooperation Organisation (SCO) member states aboard an advanced Chinese warship, just days after the US bombed Iran’s nuclear facilities.

Iranian Defense Minister Aziz Nasirzadeh was among the defense officials welcomed by Dong on a military vessel in the coastal city of Qingdao, China, as part of a two-day SCO defense ministers’ meeting that concluded on Thursday.

According to Chinese state television CCTV, Nasirzadeh and other defense officials toured the People’s Liberation Army (PLA) Navy’s Type 052D destroyer, the Kaifeng, and later attended a reception on the ship’s deck.

Aboard the ship, Nasirzadeh thanked Beijing for “supporting Iran’s legitimate position following the recent attacks” by Israel and the US.

“We hope that China will continue to stand on the side of justice, help maintain the current ceasefire, and play a greater role in de-escalating regional tensions,” Nasirzadeh said, according to Xinhua.

In his address to the assembled ministers, Dong reportedly stated that “unilateralism, protectionism, and hegemonic and bullying acts are on the rise, seriously disrupting the international order and becoming the greatest source of chaos and conflict.”

Dong called for closer cooperation within the United Nations, the SCO, and other multilateral frameworks, urging members to unite with “more like-minded forces” to defend international justice and maintain global stability.

“SCO countries must remain true to the organization’s founding ideals, uphold the ‘Shanghai Spirit,’ and deepen practical cooperation in all areas,” Dong said. “With stronger actions, we can jointly safeguard a peaceful environment for development,” he added.

The event followed the US attacks on three of Iran’s key nuclear facilities on Saturday, which Beijing strongly condemned.

The Chinese Foreign Ministry stated that the attacks on nuclear facilities under the supervision of the International Atomic Energy Agency seriously violated the UN Charter and its principles.

Additionally, the SCO meeting coincided with a NATO leaders’ summit in The Hague. In a statement from The Hague, US President Donald Trump announced that the US would hold talks with Iran about a possible nuclear deal “in the coming week.”

Bilateral Talks

According to Xinhua, the Chinese defense minister later held separate bilateral meetings with the defense ministers of Belarus, Pakistan, Kyrgyzstan, and Russia. The state news agency reported that all parties appreciated Beijing’s efforts and significant contributions to developing SCO operational mechanisms and deepening inter-sectoral cooperation during its rotating presidency. They also expressed a strong will to further consolidate and expand military ties.

Pakistani Defense Minister Khawaja Asif praised Beijing’s role in de-escalating tensions. “Pakistan highly values its robust friendship with China and is ready to work together to implement its three global initiatives, deepen military cooperation, and help maintain regional peace and stability,” he said.

For Russian Defense Minister Andrei Belousov, this year—the 80th anniversary of the victory in World War II, the Chinese people’s war of resistance against Japanese aggression, and the world’s anti-fascist war—presents an opportunity to deepen bilateral military relations. “In line with the consensus of our leaders, we will intensify strategic communication and cooperation and contribute to global strategic stability,” he said.

Meanwhile, Indian Defense Minister Rajnath Singh also attended the Qingdao meeting. This marked the first visit by an Indian defense minister to China since the deadly border clash between the two countries in 2020.

Military trust

According to the Chinese Ministry of Defense, the SCO defense ministers’ meeting is one of the key events held during China’s rotating presidency of the SCO this year. The ministers, along with representatives from the SCO and regional anti-terrorism bodies, gathered to further strengthen military trust and deepen practical cooperation among member states.

The SCO, a 10-nation bloc comprising China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, Pakistan, India, Iran, and Belarus, currently covers approximately three-fifths of the Eurasian continent and about 43% of the world’s population.

The Beijing meeting, held under the rotating presidency of the Shanghai Cooperation Organisation, highlighted China’s role as a significant international actor and the importance Tehran places on its relationship with Beijing, even as China has largely remained on the sidelines of the Israel-Iran conflict.

During a regular press conference at the Chinese Ministry of Defense on Thursday, when asked if Beijing was considering providing military support to Iran as an SCO member, ministry spokesman Zhang Xiaogang told CNN, “China is ready to cooperate with all parties to play a constructive role in maintaining peace and stability in the Middle East.”

Kaifeng destroyer

The Kaifeng destroyer, where the meeting’s reception was held, is the sixth vessel of the extended Type 052D variant and serves in the North Sea Fleet. Commissioned in April 2021, the ship is approximately 159 meters (521 feet) long, weighs 7,500 tons, and is equipped with 517C anti-stealth radar. Its expanded deck allows for the landing of the PLA Navy’s Z-20 helicopters.

The warship has conducted numerous long-range exercises, including a passage through the Tsushima Strait in April, as part of Beijing’s growing operational presence in the western Pacific.

It was publicly displayed during the 74th-anniversary celebrations of the Chinese navy in Qingdao in 2023.

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