July 2024
This article is part of Sandpiper’s Public Affairs Tracker content series. Our Public Affairs team provides in-depth monitoring and analysis on emerging political and macroeconomic issues, helping companies formulate appropriate strategies for challenging business environments. Click here to explore other recently published articles.
After months of anticipation, the Central Committee of the Chinese Communist Party is set to convene its Third Plenum from 15 – 18 July. This event is likely to set the pace and direction of China’s economic trajectory for years to come. Postponed since last autumn, the silence around the delay has been a cause for tense speculation, casting ripples of uncertainty among the business community – both in China, and abroad.
Occurring every five years, the Third Plenum is a pivotal policy gathering – one of seven Plenary Sessions in the CPC’s five-year congressional cycle. Historically, these meetings have tended to signal a watershed moment of sweeping, nationwide reforms – from Deng Xiaoping’s transformational Third Plenum of the 11th Central Committee in 1978, which kick-started ‘Reform and Opening’, to the 2013 Third Plenum of the 18th Central Committee, which saw General Secretary Xi Jinping introduce a broad programme for ‘comprehensively deepening reform’ across the economy, government and society.
These historic meetings offer valuable insights and garner significant attention from economists, policymakers and business people alike. Understanding the upcoming Third Plenum will be essential for both domestic and international companies operating in China’s singularly complex economic environment.
China’s economy grew faster than expected in the first quarter of the year, buoyed in large part by strong export figures. Yet several of its systemic weakness remain unabated. The chronic real estate crisis and massive local government debt problem remain two of the most significant obstacles to sustainable economic growth, while consumer confidence has still not returned to pre-pandemic levels. Meanwhile, recent U.S. and EU tariffs on some of China’s key strategic exports have raised questions about the international viability of the country’s industrial innovation sector.
The necessity of attracting foreign investment and expertise remains central to China’s ongoing modernisation drive – as does the imperative of re-assuring the international business community that China is open to the world and willing to play by the rules. We can expect more messaging on these fronts.
While the upcoming Plenum is unlikely to mark a fundamental turning point in China’s long-term development strategy, we can certainly expect a significant recalibration across a range of priority areas. No specific agenda has yet been publicised, but if recent policies, meetings, and high-level messaging are anything to go by, we are likely to see a broadening of structural reforms, an enhanced focus on science and technological innovation, and a redoubled emphasis on tackling systemic challenges facing the Chinese economy and society at large.
Attention is likely to fall on two key realms: the policy framework and the structural reform agenda. The first will reveal whether the delicate balance between economic growth, ideological considerations and security concerns will be maintained, as in recent years – or whether one of these pillars will have to give. The second will unveil the roadmap for China’s economic priorities over the next half-decade and beyond through a host of structural reforms.
Key reform areas are likely to include: promotion of new quality productive forces; green transformation; fiscal reform (including consumption tax reform and local government debt resolution); digital economy and data; rural revitalisation (including land reform); support for urbanisation (including hukou reform); a unified national market; high-level opening up; and financial sector reform (including capital market development and risk prevention).
Recent high-profile political and economic events – such as the latest Politburo meetings and study sessions, Lujiazui Forum, and Xi Jinping’s business symposium in Shandong – have given observers an indication of potential changes to come. All eyes will now be on the Third Plenum this month. Getting to grips with its outcomes and implications will be crucial for MNCs seeking to adjust their strategies and navigate China’s ever-evolving economic and political landscape.
Sandpiper’s dedicated team of public affairs professionals and seasoned China experts will be monitoring developments in real time, analysing the significance of new policies and reforms, and interpreting their potential impact on the areas that matter most to you.
We are pleased to offer you our Tailored Analytical Report: Unpacking Post-Meeting Developments and the Reform Agenda.
This report will synthesise key takeaways, including policy directions, leadership appointments, and industry-specific reform implications, to empower informed decision-making within your business sector.