Explained: China’s Third Plenum, key policy meeting held amid concerns around

On Jul 15, 2024

China’s policymakers met in Beijing on Monday (July 15) for the Third Plenum, described by state media as an “epoch-making meeting” with outcomes for the country’s economic and social policy. China Daily also noted the “high expectations” around the four-day event for potential steps to “further energise the world’s second-largest economy.”

Official GDP data released on the same day showed economic growth of 4.7% in April-June, the slowest since the first quarter of 2023. However, exports have been rising, and China hit a record $99 billion monthly trade surplus amid low domestic consumption last month.

In general, plenums are meetings of the Central Committee of the Communist Party of China (CPC). What happens at them and what is expected this year in terms of outcomes, given some concerns around the country’s economy? We explain.

What are the plenums of the Chinese Communist Party?

In China, the CPC plays an overarching role as the party-state, meaning that key institutions and processes of the state come under its control. As the Secretary General of the Communist Party, China’s President Xi Jinping currently heads this system.

Every five years, a major party congress is held for members to be elected to the Central Committee. It is an important body, which consists of more than 300 members. Decisions on the elevation or removal of leaders and amendments to the party’s constitution are taken at the gathering. In 2022, the last time it was held, it led to Xi’s confirmation as the President for an unprecedented third term.

Between congresses, plenums are held periodically for deliberations on government policy. Third plenums usually focus on economic issues.

Are major decisions taken at these meetings?

The China Daily article notes, “The third plenum of the 11th CPC Central Committee in 1978 marked the beginning of China’s reform and opening-up drive under Deng Xiaoping, setting the country on a path to economic transformation.”

However, the think tank Asia Society Policy Institute argues that the Chinese state often “venerates” this event, even though its outcomes were decided beforehand: “This legendary plenum mostly rubber-stamped policies approved by a Central Work Conference a month prior in November, when Deng cemented his political ascendancy over Hua Guofeng, the designated successor to Mao Zedong and the Party’s titular leader from 1976 to 1981. The plenum did not even mention ‘reform and opening,’ an agenda that evolved over many years.”

Overall, it found, “Subsequent third plenums introduced policies that helped to improve China’s economic governance, but they typically implemented reform directives that Party leaders had already outlined.” Still, the meetings help underline key agendas of the government.

Another key plenum was held in 2013, soon after Xi assumed the party’s leadership and the presidency. The abolishment of the One Child Policy was also announced here and followed through in 2016.

The government has had a mixed record in terms of its follow-up on the promises made, including “deepening economic reform”, as Xi said at the time. There was an expectation in the West about an increased role of the markets in the economy and a move away from state control, but for many, this did not come to fruition. The event also set the stage for Xi’s increasing control over the party.

What should be expected this year?

State media has again highlighted “deepening reform across the board and advancing Chinese modernization” at this year’s plenum. Major announcements on economic reform are not expected, but there may be mentions of the economic situation.

According to a Reuters analysis of recent data, “Of particular concern was the consumer sector, with retail sales growth grinding to an 18-month low as deflationary pressures forced businesses to slash prices on everything from cars to food to clothes”. The Covid-19 pandemic and its strict restrictions have been blamed for reduced economic activity and lowered consumer spending.

China’s property sector has also been a source of concern. Along with certain risky business practices from Chinese builders and some government regulations, there has been a mismatch in the number of people who have spent heavily on buying houses and the number of units built. Many building giants are now in massive debt and there are worries of a spillover to other parts of the economy.

Another key element Xi has emphasised is “New quality productive forces”. It refers to advancing the science and technology sectors, with focus on fields like Artificial Intelligence (AI), green energy, and electric vehicles.

According to Asia Society, “The plenum will likely lead to a further reduction in the negative list for foreign investment and offer more incentives to do business in the country’s free-trade zones. Xi wants high-tech multinationals to help China develop through technology transfer, skills training, and competition for domestic firms, though his objective remains for China’s national champions to eventually overtake their foreign rivals.”

(With Reuters inputs)