BEIJING: China’s delayed third plenum kicks off on Monday (Jul 15) and will focus on deepening reforms and advancing Chinese modernisation, according to state media.
The once-every-five-year meeting will also likely focus on further cementing the Chinese Communist Party’s (CCP) leadership and socialist values.
It will guide the country to harness so-called “new quality productive forces” such as artificial intelligence and other “stranglehold technologies” that are at the mercy of its western rivals.
“Chinese President Xi Jinping has been very concerned with China being constrained by Western powers in terms of high technology – chips, advanced materials, machine tools, etc,” said Assistant Professor Adam Liu Yao from the National University of Singapore’s Lee Kuan Yew School of Public Policy.
He added Mr Xi is determined for China to be self-sufficient in these areas, not just to reduce dependency on the West, but also to stimulate the domestic economy and speed up its military modernisation.
“This whole idea of new quality productive forces is going to be an innovation-driven growth model, at the heart of which is science and technology development,” he told CNA’s Asia First programme.
Ms Dan Wang, chief economist of Hang Seng Bank (China), added that the Chinese government has stressed its intention to pour resources into developing the high-tech sector.
WHAT’S THE THIRD PLENUM?
Traditionally, the third plenum is a launchpad for major economic and social development goals that set the nation’s agenda for the next few years.
Known as the San Zhong Quan Hui in Mandarin, the event is the third full meeting of the CCP’s Central Committee, and one of seven such sessions to be held over the five-year term of the elite body.
The meeting typically takes place during the months of September to November the year after the National Congress. It was expected to be held last year but was delayed without explanation.
The plenum is closely watched as such meetings in the past have become milestone moments in China’s history, including the 1978 session which marked the start of China’s reform and opening up policy.
In 2021, Mr Xi first introduced the concept of “Chinese modernisation” in a speech to mark the party’s centennial, calling it “a new model for human civilisation”.
WHAT’S ON THE AGENDA?
For this session, observers are not anticipating drastic policies. Instead, expectations are for a scaling up of existing reform measures.
As China battles economic headwinds on many fronts, including the ongoing property crisis, analysts believe the leadership may not want to rock the boat too much.
“The key words would be consistency and stability for this session because China is now in an uphill battle, dealing with economic development and also global pressure,” said Dr Liu Baocheng, director of the University of International Business and Economics’ Center for International Business Ethics.
“To keep the central leadership of Xi Jinping and on top of that, push more of the leadership of the Communist Party at different institutions, would be the desired outcome of this meeting,” he added.
Policymakers are banking on the development of new and cutting-edge technologies to drive growth. Experts said this includes biotechnology, green energy, artificial intelligence and the aerospace industry.
This marks a shift from its old growth model that relied on real estate and infrastructure, which raises questions over how much support China’s property sector will receive.
Measures so far have failed to revive the crisis-hit sector, with latest home price data still logging a decline.
EXPECTATIONS FOR REFORMS
The world’s second-biggest economy is also grappling with a declining population, shrinking labour force, and weakened business confidence.
While China is expected to hit its growth target of around five per cent this year, economists say Chinese policymakers need to ramp up structural changes to focus on long-term economic policy.
They have been calling on the central government to cover more expenses, as localities are saddled with debt made worse by the property crisis.
“Over the past 20 years, local governments have relied very, very heavily on a debt-fueled investment growth model for which land financing is a central part,”Asst Prof Liu said.
“Local governments in China shoulder more fiscal responsibilities than any other local governments around the world.”
Ms Wang, the economist, said China needs to broaden its tax base by either increasing individual income tax, corporate tax, or clamping down on tax evasion.
“China has to maintain its financial stability because most of its commercial banks are highly exposed to the housing market. The non-performing loan issue has crippled basically the banks and local governments,” she said.
With China’s economy facing a patchy recovery, expectations are growing for fiscal reforms in the third plenum that could help bring in support, she added.
Observers are also looking out for potential personnel changes on the back of the expulsion of two former defence ministers last month.
The third plenum convenes from Jul 15 to18.
