Jeremy Mark
As China grapples with a property crisis, high youth unemployment, tumbling business and consumer confidence, and an ocean of local government debt, one might expect the government to put everything it has into plans to pull the country out of the economic doldrums. But a meeting of senior Chinese leaders this month is shaping up to offer a very different set of reforms.
Instead of focusing on China’s current problems, the Third Plenum of the Chinese Communist Party’s (CCP) Central Committee—so-called because it is the third session of the committee’s five-year term—will prepare China for a confrontation with the United States by building industries powered by massive investments in cutting-edge technologies. This program is aimed at reinforcing the party’s hold on Chinese society and paying obeisance to paramount leader Xi Jinping, whose policy mistakes—ranging from zero-COVID-19 lockdowns to a crackdown on major online companies—have produced economic malaise. It will also underline China’s shift away from its longtime economic strategy of growth for growth’s sake.
Among the policies expected to be announced at the July 15-18 plenum (which was inexplicably delayed from late 2023) will be reforms restructuring tax and fiscal policies, as well as greater coordination of regional economic development. Both are policies that will reinforce the role of the central government in guiding development. There will probably also be declarations of support for China’s beleaguered private sector, which accounts for more than 60 percent of gross domestic product and over 80 percent of urban employment. But Xi and his subordinates have emphasized that the policy pendulum is swinging decidedly toward statist solutions.
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