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.
