The roughly 370 members of the committee, elected at the National Congress held twice every 10 years, include members of the Politburo, the party’s highest decision-making body, as well as ministers, provincial party secretaries, senior generals, and heads of state-owned enterprises. Committee members typically attend seven plenary sessions over their five-year term.
The third plenary session marked a milestone since 1978, when top leader Deng Xiaoping set a closed, poverty-stricken China on the path to reform and allowed foreign companies to operate in China, among other major decisions.
In the 1990s, party leaders again made global headlines when they decided to allow loss-making state-owned enterprises to go bankrupt. Something similar happened in 2013, the year after Xi became party secretary, when a unanimous vote was made to declare “allowing the market to play a decisive role in resource allocation” the central aim of all reforms. In both cases, the announcements were a good sign for a freer economy.
China’s strategy is expected to take more external factors into account this time. While bold moves are not expected at the upcoming Central Committee Plenum, analysts say it is worth watching how the world’s second-largest economy tackles “high-quality development” and achieves “China’s modernization,” to quote President Xi’s catchphrase.
This is particularly important in light of a larger retreat from globalisation and the rise of protectionism and right-wing politics, as highlighted by the recent European Parliament elections, they said.
Decisions at the meeting will test how hard the ruling party can push for “China de-risking” in global supply chains and help the Chinese economy cope with fierce competition for markets and technology from the United States and other Western countries. These challenges are intertwined with China’s own problems, including an aging population and declining consumer and investor confidence.
Observers are also closely watching announcements related to several unexplained dismissals of senior officials over the past year, as the party and the public still expect “just reasons” to be given for their resignations.
“Market sentiment remains gloomy and bold policy measures will be needed to restore confidence in China’s long-term economic trajectory,” said Neil Thomas, a Chinese politics researcher at the Asia Society Policy Institute’s China Analysis Center.
“But those expecting this plenary session to be as significant for market reform and opening up as the iconic Third Plenary in 1978 will likely be disappointed.
“The meeting is unlikely to announce the bold economic reforms that many economists, entrepreneurs and investors have long called for. Instead, the focus is likely to be on structural reforms to advance President Xi Jinping’s focus on the economy, investing in technology, manufacturing and human capital.”
On June 11, Xi led a meeting with China’s top group on deepening institutional reform and outlined possible economic priorities.
According to state news agency Xinhua, the meeting decided that to build an open and “globally competitive” environment for technological innovation, China needs to expand international technological exchanges, attract and retain more overseas talents, and actively participate in global technology governance.
The Central Committee for Deepening Comprehensive Reform also resolved to improve China’s corporate governance system and better protect the interests of farmers.
“In the face of complex international and domestic situations, the new scientific and technological revolution and industrial changes, and the new expectations of the people, China’s reform must continue,” the meeting decided.
“New high-quality productivity” is another catchphrase coined by Xi, who describes it as “high productivity liberated from the traditional economic growth model” and characterized by “high technology, high efficiency and high quality.”
Xi introduced the term last year during a visit to China’s northeastern Rust Belt region, where China’s dominance in heavy industry is being threatened by shifts in traditional growth drivers.
Xi said the new production capacity was “in line with the country’s new development concept” and vowed to encourage innovation and address technological bottlenecks at a time when trade and investment curbs imposed by the United States and its allies have denied China access to advanced semiconductors and other high-tech products.
“The external environment has rapidly increased in complexity, severity and uncertainty,” the Politburo meeting resolved, according to the state-run Xinhua News Agency.
“Being number one in science and technology is an aim for the Chinese Communist Party, just like the US, but it’s not the only aim,” said George Magnus, a research fellow at the Oxford China Centre.
“This is the path to leadership and control of the Fourth Industrial Revolution, and to upsetting the global economic order in China’s favor. That’s why I believe the Party [plenum] It will have a lot to say about new productivity, policy and strategic directions.”
Wu Junfei, a research fellow at the Hong Kong China Economic and Cultural Development Association think tank, said China was likely to fund its tech ambitions by increasing bond issuance.
“The general meeting is likely to pave the way for an expansion of national debt,” Wu said. “The funds raised will not be used to boost domestic consumption or improve social welfare policies. Rather, they will be mainly used for science and technology projects and industrial upgrading to break through the Western blockage.”
Last Friday, Beijing issued 35 billion yuan (US$4.8 billion) worth of 50-year “ultra-long” government bonds, the fourth trillion-yuan bond offering with 20-, 30- and 50-year maturities planned this year.
The first round of bonds, issued on May 17, was worth 40 billion yuan.
When Premier Li Qiang announced the plan in March, he said the special bond issuance could continue for several years.
According to the National Development and Reform Commission, the top economic planning agency, the bonds will fund scientific and technological innovation, urban and rural integrated development, regional development coordination, and food and energy security.
In a March report, the International Monetary Fund warned that China needs to pay attention to the sustainability of its public debt. While acknowledging that China has “policy space” to expand fiscally, it noted that China’s public debt growth in recent years has been “faster than that of the United States.”
In addition to “new, high-quality productive forces,” the plenum is likely to set the tone on a range of fronts toward achieving what Xi calls “China’s modernization,” said Chen Daoyin, an independent political analyst. His assessment was based on remarks made by China’s four top leaders during a recent inspection tour that traditionally precedes the Third Plenum.
The four visited Anhui, Henan, Liaoning, Guangxi Zhuang Autonomous Region, Xinjiang Uygur Autonomous Region and other provinces, emphasizing technological self-reliance, high-quality development, social stability and further integration of ethnic minorities.
Xi called for more thorough reforms to address economic problems, vowing to “resolutely eliminate the ideological concepts and institutional defects that hinder the promotion of Chinese modernization.”
He also stressed the need for a “goal-oriented and problem-oriented approach that focuses on deep-rooted institutional impediments and structural issues,” in what was perceived as a strongly pro-business message ahead of the Third General Assembly.
Gabriel Wildau, managing director of consulting firm Teneo, said his comments suggested the party leadership was seeking to reassure investors and entrepreneurs that it still valued economic growth, the private sector and market forces.
Business confidence has been declining since China cracked down on property developers, internet companies and tutoring firms in 2020 to curb the “blind expansion” of private capital.
The prolonged “zero-COVID” restrictions following several years of the pandemic and tougher national security rules also dampened investor sentiment.
In addition to the bond issuance, Beijing also announced a series of policy measures on May 17.
David Tang, an entrepreneur from eastern China’s Jiangsu province, said he didn’t have high expectations for the third plenary session.
“The message delivered during President Xi’s meeting with business executives was pro-business, but this is not the first time the party has emphasized its support for the private sector,” he said.
“In reality, private companies are often crowded out by government-backed companies when bidding for public works projects. More government-backed companies have been set up in recent years to revive the economy and rescue the struggling real estate sector, but the situation has not improved.”
Apart from economic issues, the general meeting is usually a forum for demonstrating unity within the party.
But those attending the July meeting may find it hard to ignore the glaring problem of Central Committee colleagues who have lost their positions and disappeared from public life.
Messrs. Qin and Li were stripped of their government positions — Qin in June last year and Li in August — after failing to attend public events for several months, but they remain members of Xi’s 370-member Central Committee.
It is unusual for a top diplomatic and military official to be replaced so soon after being appointed, suggesting foul play, but Beijing has offered no explanation for his sudden dismissal.
To formally expel a member convicted of corruption, the committee must approve an official resolution at a general meeting.
A political science professor at Nanjing University said it was important for party leaders to officially settle the firings, especially those with unknown reasons.
“There will be a lot less speculation about the cases of Agriculture Minister Tang Renjian and former Rocket Force commander Li Yuchao because it’s common knowledge that they are under investigation for corruption and this is actually nothing new,” said the professor, who asked not to be named.
“In a sense, such an announcement is an end, it tells those within the establishment that the political careers of these leaders are over.
“That is why it is important to bring the unexplained dismissals of Qin Gang and Li Shangfu to a proper conclusion. In Chinese politics, no matter how powerful a leader is, there must always be a justification for their actions.”
