Behind closed doors, far from the spotlight and even further from the press, the Communist Party conclave is starting in China, aimed at laying down the political and economic guidelines for the next few years in the second power on the planet. The so-called third plenary session of the Central Committee, a body that brings together the country’s more than 370 top leaders, is being held from Monday to Thursday amid a turbulent international landscape and an internal economy that shows no signs of recovering its full form.
Many analysts are anxiously awaiting signs that may indicate Beijing’s direction in all areas, from finance to the military to the fight against corruption. There may even be clues about the still-missing former foreign minister, Qin Gang, more than a year after his last known photograph. Almost nothing has been revealed about the content of the meeting. The tightly controlled state press has assured, in its usual official language, that the plenary session “will mark an era” and that there will be deliberations around a “key political document” that will deal with “the deepening of reform in all areas and the advancement of Chinese modernization.” In other words: little is known.
The third plenary session is often considered the most important of the seven that the Central Committee holds during its five-year mandate. The meeting comes more than six months later than usual. No explanations have been given, which is just another mystery open to speculation: it may be a sign that the communist leadership wanted to give the economy time to improve – it hasn’t happened: this Monday the quarterly growth figure was published, 4.7%, below expectations; the housing sector continues to suffer and consumption remains sluggish – or that the agreed reforms have taken longer than expected. Perhaps it is a mixture of both. Or neither.
For Alexander Davey of the Berlin-based Merics Institute, the focus of the conclave on “Chinese modernisation” indicates the communist leadership’s concern about the economic performance and its social consequences. “The fact that the party mentions it shows that it is very aware of the problems of inequality and equality of opportunity. And by putting it in the title, it shows that it is something they want to address,” the expert said last week in a teleconference. Public perception of this inequality is changing, he says, forcing the party to take some kind of measures.
There is a “lack of clarity in the direction of policy in China” and “a lot of uncertainty that feeds very low consumer sentiment,” added Bert Hofman, a professor at the East Asia Institute of the National University of Singapore, in an online meeting with correspondents in early July. Private sector investment is not picking up, there is “some” capital fleeing abroad, “and a lot of rich people trying to get out of China,” he added. “This is a time when China has to show its cards.” In his opinion, “high-quality growth” could be the big theme of the meeting, a concept that Beijing uses to talk about the change from a model of cheap manufacturing to one driven by innovation. He foresees debates on “new productive forces,” the fashionable term, a synthesis of old-style Marxism projected towards a hyper-technological future, launched last year by President Xi Jinping. The mass production of electric cars is one of the pillars on which this new policy gravitates.
This is precisely one of the critical points of friction with the EU and the United States, which have begun to protect themselves from the export of Chinese products linked to the ecological transition. Since the beginning of July, electric vehicles manufactured in China have been subject to provisional tariffs of up to 47.6% upon arrival at the ports of the EU member states; the United States previously imposed tariffs of 100%. Other countries, such as Brazil, Turkey and Indonesia, have also taken protectionist measures. Both the EU and the United States are calling on China to correct its macroeconomic imbalances, which are hampering domestic demand and leading to exports as an escape route.
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Another point of friction is the war in Ukraine. Last week, at the NATO summit in Washington, Jens Stoltenberg, the organization’s secretary general, reserved harsh words for Beijing: he considered it a “decisive facilitator” of Russia’s war against Ukraine. “China cannot continue to fuel Europe’s largest military conflict without affecting Beijing’s interests,” he said at a press conference. “We need to remember what kind of regimes we are talking about, tyrannical machines. China is oppressing its own people, cracking down on democratic voices in Hong Kong, behaving more assertively in the South China Sea, threatening its neighbors and threatening Taiwan,” he denounced.
In Beijing, times are marked by a double message: the government repeats a speech of openness to the world, relaxes its visa policies, asks to be visited by tourists, businessmen and academics, calls for foreign investments; at the same time, it deepens control over economic sectors, Xi speaks of a world in a phase of turbulence where changes are taking place that have not been seen in 100 years, and asks its citizens for a fighting spirit. The document that emerges from the meeting may be an opportunity to see how this struggle between national security and autonomy in strategic technological sectors is going, on the one hand, and the search for the so-called “common prosperity” and openness to the outside world, on the other.
Max J. Zenglein, chief economist at Merics, sees a change of direction unlikely even though the economy faces “headwinds.” “Xi Jinping has doubled down on his economic policies,” he said at the online conference. At the third plenary session in 2013, the first under Xi, there was still a debate between those seeking “a more liberal, reformist path” and those who advocated “the return of the party” and “strengthening” its control over the economy, he said. But now, with the leader at the head of the party for an unprecedented third term and having changed the Constitution to remain in power, there is already “a strong conviction that the party must control the economy.” The idea, he believes, will be “to try to align economic actors with national strategic priorities.”
In the often unpredictable black box of Chinese politics, anything can happen. Third Plenums have been the origin of policies that have profoundly changed the country. Some observers even attribute “mythological” qualities to them, Neil Thomas and Jing Qian write in an analysis prepared last week for Asia Society. The 1978 conclave launched President Deng Xiaoping’s market-oriented policy of reform and opening up of the Chinese economy. The first conclave of the Jiang Zemin era, in 1993, consolidated the decision to establish a “socialist market economy.” Often the interpretation of conclaves does not become clear until much later, and many analysts miss the mark in their immediate interpretation. In Xi’s first, in 2013, many believed they read signs of greater economic opening and political liberalization. “But its real importance was to allow Xi to centralize power,” the authors say.
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