China’s Communist Party concluded its four-day Third Plenum of the Central Committee – a twice-a-decade policy meeting – releasing a communique and resolution that sought to strike a delicate balance between growth and security in the face of mounting uncertainties. The Plenum was attended by 199 members and 165 alternate members of the Central Committee. It laid out a wide range of reform objectives to be completed in the next five years before the People’s Republic celebrates its 80th anniversary in October 2029. A third plenum – usually held in October, but this year postponed till July – used to be an occasion to formulate five-year economic policies. The communique stressed that China must “unwaveringly strive to finish this year’s growth targets”, previously set at “around 5%” GDP growth. The Chinese economy grew 5% in the first half, but growth slowed down from 5.3% in the first quarter to 4.7% in the second. From 2013 to 2023, the Chinese economy has achieved an average annual growth rate of 6.1%, ranking among the leaders in the world, and contributing over 30% to global economic growth each year. The leadership asked party members to take active steps to stimulate domestic consumption, and build new momentum to drive exports and imports”. This could mean that more aggressive policy interventions are to be expected. But most parts of the communique focused on the long term.
Previous third plenums unveiled landmark changes. At the plenum of 1978, the policy of reform and opening up was adopted. In 1993, China’s status as a “socialist market economy” was formalized, and the 2013 plenum codified the market’s “decisive role” in resource allocation. Third Plenums have focused on China’s economic road map for decades to come, rather than address near-term issues.
The Central Committee vowed that China would continue to deepen reforms in all areas, including the economy, rural land, taxation, environmental protection, national security, fighting corruption, and cultural development. The word “reform” appeared 53 times in the statement, indication improving governance and increasing efficiency. Speeding up China’s science and technology development is central to the reforms, seen as mission-critical to the nation’s economic transition. The Plenum documents also called for the country to deepen supply-side reform, better integrate the digital economy into the real economy, upgrade modern infrastructure, and build resilience in its industrial supply chain. They identified improving human capital and talent as the foundation to achieve these goals. “We must thoroughly and faithfully implement the strategy of rejuvenating the nation through science and education and strengthening our talent pools. Education and innovation must go hand in hand”. On the economic front, the Communique and Resolution promised to “give better play to the role of the market” but omitted the often-used phrase of the market being the decisive force in the economy. Instead, they stressed the need to maintain market order and correct market failures, reflecting concerns about risks in the financial system.
The Plenum did pledge “unswerving support and guidance” to the development of the “non-state sector” and said the government should ensure “all forms of ownership” in the economy could compete fairly and lawfully “on an equal footing”, indicating support for private enterprises. It called to control risks as China faced “complex and fast-changing internal and external challenges. “We must implement the right measures to prevent and resolve risks in critical areas such as the property sector and local debt. We must ensure financial institutions strictly follow safety guidelines. The government must improve the monitoring and prevention of natural disasters, especially floods. We must build a social security network to maintain social stability effectively.” The Communist Party vowed to continue the fight against corruption, particularly in the military. Several high-ranking officers were expelled from the Party by the Plenum.
Better protection for private sector rights was among hundreds of reform goals, in addition to further efforts to open up to foreign business, create a “transparent and stable” environment for them and protect intellectual property. Han Wenxiu, Deputy Director of the Central Financial and Economic Affairs Commission’s General Office, said that it was “necessary to create a favorable environment and provide more opportunities for the development of the private sector” in China. Observers and business owners have welcomed the expected initiatives, but some raised concerns about their implementation at the local level. The Plenum also supported the formulation of a law to promote the private economy, the drafting of which is believed to be already under way. Excessive governmental interference in economic disputes will also be curtailed. The measures are taken amid low confidence in the private sector, where investment dropped by 0.4% last year, while that in the state sector rose by nearly 5%.
China would work to establish a transparent, stable, and predictable environment for foreign companies and would continue to open up sensitive sectors like communications, the internet, medicine, and culture to overseas players. It would also further protect the “commercial secrets and intellectual property” of foreign companies so as to “vigorously safeguard the rights and interests of foreign-funded enterprises”, and would welcome more foreign service, capital and labor. The Plenum also agreed to make life in China more convenient for foreign nationals, including making e-payment systems and medical care more accessible.
The Communist Party has also for the first time explicitly pledged to allow migrants to register their official residency, known as hukou, in the urban areas where they work and to give them equal social benefits as local residents, potentially resolving a long-standing issue that has fed China’s wide urban-rural wealth gap. The Plenum decided to introduce a system under which people register their hukou in their usual places of residence and enjoy basic public services there. Over 66% of China’s population lived in urban areas at the end of last year, but only about 48% had an urban hukou.
The Communique of the Third Plenary Session of the 20th Central Committee of the Communist Party of China is available here .
The Resolution of the CPC Central Committee on Further Deepening Reform Comprehensively to Advance Chinese Modernization can be downloaded in docx format from the Chinese government website here .
This overview is based on reports by the Global Times, China Daily and South China Morning Post.
