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China’s ruling Communist Party is wrapping up a top-level meeting on Thursday that is expected to endorse policies aimed at building the country’s technological prowess and fortifying its national security.
The plenary meeting of the party’s Central Committee was held behind closed doors. But analysts expect a major focus to be on strategies for self-sufficient economic growth at a time when China faces tightening restrictions on access to Western advanced technology, such as leading-edge computer chips and artificial intelligence.
Foreign investors and markets were watching to see what the party might do to counter the slump in China’s real estate sector and weak consumer confidence that has hindered China’s recovery from the COVID-19 pandemic.
Economic growth slowed to 4.7% on an annual basis in the April to June quarter, as investments in real estate and property sales continued to decline despite a raft of measures aimed at encouraging families to buy housing.
Recent reports in state media and earlier government policy statements suggest Beijing will continue to prioritize investing in technologies and encouraging companies to upgrade their equipment and knowhow in line with leader Xi Jinping's call for “high-quality development.”
“Xi’s recent remarks on reform and opening-up at various major meetings provide a crucial window into the tone of the session, the priority of China’s reform agenda and the overall goal of further deepening reform and advancing Chinese modernization,” the party newspaper Global Times said in a commentary.
It said the meetings would “draw a blueprint for reform on all fronts,” aiming to improve China’s governance and to “resolve deep-seated institutional challenges and structural issues, so as to promote high-quality development and advance Chinese modernization.”
Chinese leaders have repeatedly said China will keep its doors open to foreign investment and improve the business environment, despite ever-extending Communist Party controls over companies, social media, financial regulators and other aspects of life.
“This is opposite to earlier promises and pledged reforms of further opening up of the economy and pro-market policies,” Teeuwe Mevissen, a senior strategist at Rabobank, said in a report.
New incentives for foreign investors are a possibility, he said, as well as moves in line with Xi's call for a “common prosperity” that enables ordinary Chinese to benefit more from economic growth.
Another priority is relieving the financial squeeze on local governments that have built up huge amounts of debt after a crackdown on heavy borrowing by property developers pushed the real estate industry into crisis, cutting off a vital source of tax revenues from sales of land-use rights.
This week’s meetings are the third plenary session of the 205-member party Central Committee, which began a five-year term in 2022. Delayed from last year, third plenums usually set major economic and policy decisions. Past landmark plenums launched China into its ascent as a world manufacturing and financial power in an era of “reform and opening up.”
Economists say the odds the meeting will announce significant stimulus spending to help boost the economy are low. And details of any decisions may not come for days, if not after the party's powerful Politburo meets later this month.
But the scale of problems Beijing is facing have upped the urgency for action.
“Historically, the third plenum generally disappoints when it comes to the announcement of significant policy overhauls. However, this time might be different given China’s mounting economic challenges,” Mevissen said.
