China’s 20th Central Committee Plenum: Navigating Economic Realities Amid Growing Tensions
As the third plenum of the 20th Central Committee of the Chinese Communist Party (CCP) convenes in Beijing, the global community waits to see the key decisions that will shape China’s economic policies and modernization strategies. Scheduled to conclude on July 18, the plenum’s outcomes are being watched closely, especially given recent economic headwinds and geopolitical challenges.
The centerpiece of the discussions is expected to be the “Decision on Further Comprehensive Deepening of Reforms and Advancing Chinese Style Modernization,” a document that has already been vetted in draft form by the CCP’s Politburo. This indicates that major shifts in the policy document are unlikely during the plenum itself.
Centralization and Technological Focus
President Xi Jinping has been steering China towards greater centralization, a trend that is set to continue according to Chinese official media. The focus remains firmly on high technology, which Xi has repeatedly called the “battlefield of the future.” In this strategy, state-owned enterprises (SOEs) will play the leading role, while the private sector will support from the sidelines.
This approach is partly dictated by increasing external threats, including technology denial, reduced market access, and what is seen as a containment policy led by the United States and other Western countries. President Xi appears ready to accept slower growth in exchange for greater technological self-reliance, a move some analysts view as risky.
Economic Headwinds
Just as the plenum got underway, it was announced that China’s GDP growth for the second quarter fell to 4.7%, below market expectations. Stagnant consumer spending is a significant factor, with retail sales increasing by only 2% year-on-year. The ongoing property crisis continues to weigh heavily on the economy, leading to declining real estate prices and expanding banks’ exposure to defaults. Many local governments, financially dependent on land sales and property development, are now facing insolvency. The central government’s support measures are thus likely to focus on these sectors.
Societal Discontent and Internal Challenges
During recent interactions with Chinese and foreign observers, the general sentiment was that China’s economic situation might be worse than officially portrayed. Youth unemployment remains high at around 25% for those aged 16-25. The property crisis has severely impacted the urban middle class, eroding their spending power and savings, leading to a broad pessimistic outlook.
There is also growing concern among some Chinese citizens about the state’s increasing ideological leanings and nationalism, particularly against Western influences. Social media has become a tool for attacking those seen as ideologically divergent or pro-Western, increasing fears of China regressing into a more closed society.
Geopolitical Relations: India and the US
In discussions with Chinese South Asia experts, there appeared to be no shift in China’s stance on India, despite ongoing border tensions. Chinese experts continue to view the border situation as stable and argue for a return to normal relations. They also complain about what they perceive as discriminatory actions by the Indian government against Chinese investments. Conversely, there is a perception that India seeks to benefit from the anti-China sentiment in the West, positioning itself as a more favorable alternative.
China’s geopolitical strategy is heavily influenced by its perception of the United States as an existential threat, determined to hinder China’s rise. Despite the current US involvement in conflicts in Europe and the Middle East, China believes it has more leeway to consolidate its position in Asia, viewing this period as an opportunity to strengthen its regional influence.
Conclusion
As the third plenum of the 20th Central Committee unfolds, it operates against a backdrop of economic uncertainty and complex geopolitical dynamics. The outcomes of this meeting will likely reaffirm China’s commitment to technological self-reliance and greater centralization, amidst a cautious navigation of both domestic and international challenges.
For more information on the Chinese Communist Party’s events, visit the official CCP website.
