Long-overdue third plenum to set tone for China’s development
- Meeting of Communist Party elite in July could be a watershed moment as its success may determine whether China earns the keys to the club of rich nations
At long last, China’s Communist Party leadership has scheduled the long-awaited third plenum for July. At the session, the Central Committee will meet to set the economic strategy for the coming five to 10 years.
It will be a decisive one, yielding clues to policy direction that will help decide whether China can avoid the increasingly obvious middle-income trap and transform its economy into a developed one.
The third plenum is often regarded as the most important of the seven plenums held during a Central Committee’s five-year cycle, and would usually have been held last October or November.
But term limits were ended for party chief Xi Jinping in 2018 and, now in his third term and his leadership undisputed, there is room for him to be flexible.
More likely, the work of fact finding and calibrating policy to tackle development complexity caused by domestic and external challenges required extra time.
China’s Politburo warns of risks as Communist Party readies for third plenum
Its timing is significant, falling during the anniversary month of the party, and ahead of the 75th anniversary of the People’s Republic of China founding in October.
The lateness of the meeting does not reduce the stakes. Indeed, the decision-making Politburo warned last week of risks “lurking in key areas” of the domestic economy, and fierce competition abroad, saying China needed to advance reforms and gain a strategic advantage.
It faces significant trade frictions with the United States and European Union over semiconductors and its “overcapacity’” in electric vehicles, lithium ion batteries and solar panels.
Xi and his leadership team will be explaining and reinforcing key messages to the party elite. The plenum would be a natural place to announce the fate of ousted former foreign and defence ministers, Qin Gang and Li Shangfu, both members of the Central Committee. But it is unclear whether their cases will be on the agenda.
Avoiding China being trapped in the developing world is of far greater importance than personnel matters. Xi is trying to orchestrate changes designed to help the economy being barred by higher costs and weakening competitiveness from making the leap to high-income status.
He has stressed the need for China to build new productive forces, shifting to higher quality sectors like science and technology, the digital economy and artificial intelligence and green investment.
The party regards its leadership over central and local governments and other stakeholders as offering vital stability, long-term vision and political will to orchestrate this transformation.
The Politburo also listed China’s advantages: its resilience, huge market, and complete production supply chains. Leveraging these to overcome its challenges needs not just simple central control, but flexibility, vigilance and, sometimes, aggressive action.
Success could determine whether China earns the keys to the club of rich nations.
