China’s Xi Jinping hypes up obstacle-crushing economic reforms as expectations for third plenum reach fever pitch

Addressing China’s top group on systemic reform, President Xi Jinping has called for the country to stay laser-focused on breaking down institutional impediments that stand in the way of nationwide modernisation efforts.

And some China-watchers say Monday’s meeting could also signal that preparatory work is well under way for the 20th Central Committee’s reform-themed third plenum – a highly anticipated party gathering that was delayed from last year and has not been formally announced.

Following discussions by the Central Commission for Comprehensively Deepening Reform that Xi steers, state media said a “milestone year” was in the making.

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“This year’s priority is to plan further reforms in promoting Chinese-style modernisation. We must persist in using reform as part of an overarching strategy to solve risks and challenges and to boost confidence, with a key focus on institutional obstacles,” party mouthpiece Xinhua said in a readout after the meeting.

Notwithstanding the economy’s 5.2 per cent growth in 2023, confidence among foreign and private businesses in China continues to falter. Its business environment and markets have been strained by policy unpredictability and stalled reforms, hindering the appeal of the world’s second-largest economy despite Beijing’s repeated vows that a laundry list of problems are being addressed.

“How to restore confidence is one key aspect to watch, as Beijing cooks up new reform initiatives and implementation plans,” said Alex Ma, an associate professor of public administration at Peking University.

Economic confidence remains stubbornly feeble even after Beijing rolled out policy packages tailor-made for private and foreign firms in the second half of last year.

Another issue to watch, according to Ma, is how leadership intends to juggle its economic transition with growth, while ensuring that such growth can be maintained at a suitable clip.

As the post-Covid recovery needs to be further entrenched following a bumpy 2023, market expectations are building up for Beijing to recommit itself to reforms and use occasions like the third plenum to thrash out action plans for concrete implementations to rekindle the hope of businesses.

The third plenary session of the party’s Central Committee is traditionally held in the year following the party’s twice-a-decade national congress – which took place in October 2022 – and is usually centred on setting core reform and economic agendas.

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Zhu Jiangnan, a political scientist at the University of Hong Kong, said the third plenum may be approaching, now that Xi has set the tone and teased more reforms for this year.

“Monday’s meeting could be in preparation of the plenum,” she said, adding that the reform message that emerges from the plenum could put the onus on economic policy with “Chinese characteristics and central leadership”, accompanied by vows of substantive “efforts to make real changes”.

Ma at Peking University said Monday’s meeting reaffirmed that reform remains a buzzword to watch for this year, which he called “reassuring”.

“The more [the plenum] is delayed, the more speculation, and the higher the expectations,” Ma said, pointing out that “the word ‘reform’ hasn’t disappeared from the official discourse, despite the slow progress”.

The “institutional obstacles” in need of overcoming are typically among the main gripes of businesses, analysts added.

We sorely need actions to revive sentiment

Zhu Tian, economist

Zhu Tian, an economics professor at the China Europe International Business School in Shanghai, said China must carry out real reforms to keep the government’s nose out of the day-to-day running of private and foreign firms, and must rein in policymaking vagaries and capricious enforcement.

“I think government intervention and policy unpredictability are the ‘systemic and institutional impediments’. And we don’t need to add more new government agencies to an already bloated system. We sorely need actions to revive sentiment,” he said.

State media has also amplified calls for urgent reforms. In a Monday op-ed, the Economic Daily, a State Council publication, called for more pertinent and timely reforms.

“Timely efforts must be made to break through systemic, institutional hurdles in fundamental reform realms, like a high-level unified market and opening up, as these aspects matter to the future of the party and the country,” the commentary said.


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