Navigating Challenges: China’s Third Plenum and the Complexities of its Political Economy

Xi prioritizes more than just growing China’s economy

After months of delays, China is set to hold its third plenary session of the 20th Central Committee. This meeting, which typically takes place in November or December, has been known for major economic reforms or policy announcements. The postponement of the Third Plenum in 2023 raised concerns about potential divisions within the Chinese Communist Party under President Xi Jinping, especially following the lackluster performance of the Chinese economy after the lifting of Xi’s “Zero Covid” policy in late 2022.

As the meeting approaches, conflicting narratives about China’s economy have emerged in the international media. One narrative focuses on the structural issues and policy failures during Xi’s tenure, highlighting low economic growth, high unemployment, weak consumption, demographic challenges and a sense of uncertainty about the future. On the other hand, another narrative emphasizes China’s successes in manufacturing, particularly in new energy sectors like solar and electric vehicles.

China is rapidly advancing in areas like artificial intelligence and semiconductors while posing a threat to capitalist economies. However, both narratives also touch upon an issue that has been critical to China’s political economy – overcapacity and export gluts. With a focus on export-led manufacturing due to sluggish domestic consumption, economic policies in China are closely tied to these factors. While these two media narratives may seem polarized at first glance, they are actually interdependent and each sheds light on different aspects of China’s political economy.

The third plenary session will likely be closely watched by international investors and policymakers as they seek to understand how China will navigate its current economic challenges while continuing its path towards becoming a global superpower.

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