Chinese leaders, including President Xi Jinping, opened the third plenum on Monday, which will attempt to address the country’s economic challenges. Announcements are expected by global investors.
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A summit meeting attended by Xi Jinping. The Third Plenum, a key meeting organized behind closed doors by the Chinese Communist Party, opened on Monday, July 15 in Beijing. It is to define the major economic directions for the next five years. This meeting is notable for its potential consequences on the world’s second-largest economy, as China faces an unprecedented real estate crisis, high unemployment, and slumping consumption.
A year and a half after the lifting of the zero-Covid policy, the much-hoped-for recovery is insufficient. Youth unemployment is so high – at least one in five is unemployed – that the publication of statistics has been halted. The days of double-digit economic growth, which made China rich, are long gone. Exports are a concern and the Chinese are consuming less, while saving more.
Support measures are necessary, says analyst Jean-François Di Meglio, president of the Asia Centre research centre: “What we should probably expect are measures concerning consumption. And we already have a series of announcements on tax justice and probably on incentives for consumption intended to restore confidence, most certainly. Then, we will have to see if there is a gap due to the return of the ideology which is weighing everything down a bit.”
But will this Plenum be able to reassure Chinese consumers and global investors? The problem is that the economy is suffering from the return of communist ideology, underlines Zhang Lun, professor of Chinese civilization. So, can Xi Jinping choose another path? “Xi Jinping himself does not yet have clear ideas for the futureexplains Zhang Lun. There is this attempt to go back, but at the same time, China needs foreign investment, private investment and the confidence of entrepreneurs. So he is stuck between the two lines. Given the deep contradiction of his political line, I don’t think all these problems are going to be solved.”
The delay in the Plenum, which was due to be held in the fall of 2023, clearly shows that the debates are dividing the Chinese government against a backdrop of social discontent.