context: The much-anticipated Third Plenum concluded in July 2024. Emphasising addressing geopolitical trade risks (something often off-script at economic conclaves), it revealed Beijing’s concerns over challenges from intensifying decoupling. For some PRC experts, potential remedies for this include stepping up reform and 'institutional opening' to establish closer ties between China and the rest of the world.
Zhang Yansheng 张燕生 China International Economic Exchange Centre chief researcher unpacks the Third Plenum spirit via 'three-relationships'
- relationship between opening up and reform
- emphasis on greater synergy between the two
- modernisation with Chinese characteristics needs to be positioned from global perspectives
- against rising trade disputes with other countries in the 'new three' sectors, the PRC needs to establish domestic and export coordination mechanisms
- a great power such as the PRC will generate large production and export volume in any emerging industrial sector, and managing this will be key to future development
- the PRC should commit itself to global cooperation and develop third party markets together with other countries
- rethinking global production and cooperation systems
- against rising trade disputes with other countries in the 'new three' sectors, the PRC needs to establish domestic and export coordination mechanisms
- while the West champions delinking from China in their new wave of globalisation, the PRC's response should be further expanding global cooperation
- consensus building and sharing development dividends
- relationship between Chinese-style modernisation and socialism with Chinese characteristics
- one prominent facet of Chinese-style modernisation is a massive population driving new productive forces
- the PRC needs to think about how to balance its domestic development and external responsibilities
- maintaining socialism with Chinese characteristics and the party's comprehensive leadership will be key to managing the US–PRC rivalry and efforts to foster common prosperity
- Western countries' recent pivot to industrial policies is a response to over-marketisation policies introduced in the 1980s, but the PRC faces a different problem of lagging behind in marketisation
- the role of market mechanisms should be further leveraged
- relationship between Chinese-style modernisation and modernatisation of governance
- improve national macro-governance to be more professional, market-oriented, rules-based and international
- US–PRC macroeconomic cycles are not sychronised, which is creating competition in their governance capacities
- three indicators are key to guage this competition
- comparing norminal GDP, total factor productivity and ROE (return on equity) net return on assets
- improve the national strategic planning and coordination system
- revise industrial policies to address stagnation in scitech caused by the market liberalisation wave of the 1980s
- expand domestic demand
- the PRC should
- provide short-term consumer subsidies
- increase disposable income for people
- realise social security reform and grow the middle-class
- increase the fiscal deficit rates to address the lack of funds and liquidity inadeuacies of local governments, businesses and people
- the PRC should
- improve national macro-governance to be more professional, market-oriented, rules-based and international