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China’s Third Plenum focused on various five-year reform targets

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The Chinese Communist Party concluded its critical twice-a-decade policy meeting on Thursday with a statement that sought to strike a delicate balance between growth and security in the face of growing uncertainties.

The solemnly worded statement listed a wide range of reform goals to be completed in the next five years, when the People’s Republic celebrates its 80th anniversary.

The full text of the meeting will be published next week, but in this form it gives an idea of the CPC Central Committee’s thinking and policy direction for the coming years.

The communique was issued at the end of a four-day session known as the Third Plenum, an important event for party leaders to set their long-term strategy.

This plenum, in President Xi Jinping’s third term, reflected the complex and challenging environment facing China at home and abroad, with a focus on strategies to meet these challenges in the new term.

The country’s economic growth has slowed significantly and the collapse of the financial and property markets has severely shaken public confidence.

Externally, China’s rivalry with the United States continues to intensify and relations with major trading partners such as Europe and Japan continue to fray.

On the other hand, the communiqué emphasised the completion of economic restructuring rather than drastic and abrupt changes. Nevertheless, the statement recognised the current challenges.

In addition to long-term goals, the statement stressed that China should “make unremitting efforts to achieve this year’s growth targets”.

Beijing had previously set a growth target of ‘around 5 per cent’ for 2024, but weaker-than-expected data in the first half of the year led investment banks such as Goldman Sachs to question this target.

The statement urged Party members to ‘faithfully follow the economic decisions of the Party leadership, take active measures to stimulate domestic consumption, and create new momentum to boost exports and imports’.

Lian Ping, director general of the China Chief Economist Forum, said the reference to this year’s growth targets was deliberately included in the statement as a call for recovery.

Speaking to the South China Morning Post, Lian said: ‘I believe this part will not be included in the full statement to be released later.

The leadership wants to use this opportunity to address the disappointing performance in the second quarter [of this year],’ Lian told the South China Morning Post.

On the other hand, most of the statement focused on the long term.

The committee pledged that China would continue to deepen reforms in all areas, including the economy, rural land, taxation, environmental protection, national security, anti-corruption and cultural development.

The word ‘reform’ appeared 53 times in the statement. Experts say the emphasis is also related to the goal of improving governance and increasing efficiency.

Mr Lian said he was pleased to see that the declaration addressed some long overdue issues such as tax reform.

“And it is very important that it sets a clear deadline for the completion of all these reforms by 2029. Compared to previous third plenaries, this is a refreshing development,” he said: “In the past, some reform measures were mentioned and then quietly shelved when they could not be implemented. This time there seems to be more determination to implement them.

China’s efforts to accelerate the development of science and technology are at the heart of the reforms, and this area is seen as critical to the country’s economic transformation.

It also called for the country to deepen supply-side reform, better integrate the digital economy into the real economy, upgrade modern infrastructure and build flexibility in the industrial supply chain.

To achieve these goals, the development of human capital and skills was emphasised: “We must fully and faithfully implement the strategy of rejuvenating the nation and strengthening our talent pools through science and education. Education and innovation must go hand in hand”.

Emphasis on maintaining market order

On the economic front, Beijing promised to “better play the role of the market”, but the oft-used phrase that the market is the decisive force in the economy was not included this time. Instead, the communique stressed the need to maintain market order and correct market failures, reflecting Beijing’s concerns about risks in its financial system.

It pledged ‘unwavering support and guidance’ for the development of the ‘non-state sector’ and said the government should ensure that ‘all forms of ownership’ in the economy can compete on a ‘level playing field’ in a fair and lawful manner, referring to China’s beleaguered private sector.

The need to control risk comes at a time when China faces “complex and rapidly changing internal and external challenges”.

“We must take the right measures to prevent and resolve risks in critical areas such as the property sector and domestic debt. We must ensure that financial institutions strictly comply with safety regulations,” it said.

“The government should improve monitoring and prevention of natural disasters, especially floods. We need to establish a social safety net to effectively safeguard social stability”.

Preventing ideological risks

The report also stated that China should ‘strengthen public opinion management and prevent and neutralise ideological risks’.

It pledged to continue the fight against corruption, especially in the military. The plenum received and approved reports on the corruption cases of former Defence Minister Li Shangfu and two other generals.

It was stated that the Party should exercise absolute leadership over the army and carry out the necessary reforms to achieve the goals of the 100th anniversary of the People’s Liberation Army.

Xie Maosong, a senior researcher at the Chinese Academy of Sciences’ China Institute of Innovation and Development Strategy, described the statement as ‘resolute but patient’.

Xi has said many times that ‘the easy part of reform is over’ and that we are now in ‘uncharted waters’.

Larry Hu, chief China economist at Macquarie Capital, said the statement contained no surprises for financial markets.

Rather than a concrete goal, ‘modernising China’ is an expectation to successfully address the economic, social, environmental and geopolitical challenges that China will face in the coming years,” Hu said in a research note, but indicated it would not have an impact on the market.

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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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