Beijing’s policy update presents no major shift
BEIJING – China released a policy document on Sunday outlining known ambitions, from developing advanced industries to improving the business environment, with analysts spotting no sign of imminent structural shifts in the world’s second-biggest economy.
The 60-point document’s publication follows the closed-door meeting of the Communist Party’s Central Committee, led by President Xi Jinping, which takes place about every five years, and is known as a plenum.
It was held from July 15-18 as China verges on deflation and faces a prolonged property crisis, surging debt and weak consumer and business sentiment.
These challenges have led some economists to urge Beijing to shift focus to boosting consumer demand and away from a debt-fueled, investmentled model that funnels resources into manufacturing and infrastructure at the expense of households.
China’s long-term growth potential is at stake, these economists say.
But the plenum reasserted China’s quest for “new productive forces,” a term Xi coined last year that envisions scientific research and technological upgrades of the country’s sprawling industrial complex.
It listed as strategic industries “new generation information technology, artificial intelligence, aviation and aerospace, new energy, new materials, high-end equipment, biomedicine, and quantum technology.”
“The overall industrial system is large but not strong, comprehensive but not refined, key and core technologies are controlled by others,” state media quoted Xi as telling the plenum.
Gary Ng, Asia-Pacific senior economist at Natixis, said that the plenum painted a future of “state-led economic growth, innovation and security.”
“An all-in bet on manufacturing and new productive forces may not be adequate as it is full of uncertainties,” Ng said.
The document also reiterated that markets will play a decisive role in resource allocation, that the government will work on legislation to improve conditions for the private sector, and flagged fiscal and financial reforms.
Other policy targets included boosting affordable housing, improving job opportunities for young people and the standard of living for the elderly.
Like most documents of this kind, it did not say how Chinese leaders intended to reach those goals, many of which would require policies that are contradictory in nature, as party officials acknowledged on Friday.
At a plenum in 2013, Beijing launched a policy agenda that included most of the goals listed in Sunday’s document, but also ambitions to liberalize financial markets and make domestic consumption a more prominent driver of growth.
A capital outflows scare in 2015 halted many of these plans.
Many analysts say national security considerations have pushed China in the opposite direction in recent years, tightening control over large parts of the economy and carrying out regulatory crackdowns on industries, including tech and finance.
In 2023, local governments’ fiscal revenues accounted for 54% of the nation’s total, while their expenditure accounted for 86%, data from the finance ministry showed.