june: school’s out.... third plenum looms

6 June: Neijiang, Sichuan gaokao candidates wish for top scores to compete in the tightening job market

At last set for 15–18 July 2024, the Third Plenum triggered many headlines in June. Foreign and domestic observers sought meaning in ‘further deepening reform, advancing Chinese-style modernisation’, the theme announced at the April 2024 Politburo meeting. 

A CPPCC (Chinese People's Political Consultative Conference) conclave in early June foreshadowed a high-level socialist market economy. On the agenda was a new twist on a market framework, a spin on the coexistence between state and private capital in a market system introduced in the early 1990s. The desired solution: firms leading in innovation and production, yet under the centre’s careful guidance. This may reach a new rhetorical, even doctrinal, height at the plenum. A counter-theme of 'security of everything' is equally in the mix.

CPPCC Daily reports that the conference discussed narrowing income and social security gaps. A full-page aggregation of opinions on supporting a renewed push for common prosperity, published in People’s Daily on 24 June 2024, suggests that given the ongoing economic malaise, Beijing may seek to provide the masses with a ‘sense of gain' (huódegan 获得感).

The economy, meanwhile, rolled on, scarcely improving or worsening. Profits for the run of manufacturing firms and consumer goods sales grew modestly. Prices and the Producer Price Index remained flat—property prices for both new and established homes carried on their slow descent. The Plenum, it seems, could not come any sooner.

Premier Li Qiang 李强 visited Australia, New Zealand, and Malaysia, 13–20 June. It was the first PRC premier visit to New Zealand and Australia in seven years and Malaysia in nine. Carrots for New Zealand and Australia include unilateral 15-day visa-free travel. New Zealand will support Chinese language teaching and cultural exchange via Confucius Institutes, PM Luxon pledged.

Managing differences was the focus in Australia. Li’s team came armed with over 30 agreements/MoUs. Five were eventually signed. ‘Twists and turns’ in bilateral relations are over, stated Li. His good offices were, however, set back in soft power terms when PRC diplomats openly blocked Australian journalist Cheng Lei 成蕾, recently released from detention in Beijing, from being seen or filmed. Li’s New Zealand visit had a delayed bad taste as well when the PRC Embassy to Wellington threatened the NZ press over a documentary on foreign interference. PM Luxon had raised the topic with Premier Li.

In Malaysia, PM Anwar Ibrahim declared Beijing a ‘true friend.’ The two sides renewed their five-year trade and economic cooperation pact, while PRC and Malaysian entities signed 11 MoUs.

Exports outperformed expectations in May, rising by 7.6 percent y-o-y. Imports, however, underperformed, only growing by 1.8 percent y-o-y. The trade surplus reached US$82.6 bn, a four-month high.

Recovering external demand and commodity prices were credited as driving the May export gain. Sluggish raw materials demand weakened imports. Experts urge leveraging the trade surplus to boost imports, but moves on this front have yet to be seen.

Supporting trade, consumption and investment growth remain priorities in a troubled economy. New central guidance supporting CBEC (cross-border e-commerce) exports and overseas warehouses was issued, focusing on propping up CBEC firms, stepping up financial support, logistics, state services and standards-setting. Setting out broad directions only, the Opinion’s benefits will become more apparent, say experts, when more CBEC support appears. 

Retaliation is in the air following the latest EU trade friction, not least new tariffs on EVs, first via an anti-dumping investigation into EU pork. Further sanctions are threatened in sectors that hurt Europe more than the PRC. Some contenders are brandy, already under MofCOM scrutiny, and gasoline cars, as urged by PRC automakers.

While officialdom struck a stern chord, the commentariat advised that a further trade war should be avoided. Branding the new tariffs ‘political,’ trade pundit Zhang Yansheng 张燕生 China International Economic Exchange Centre cautioned against escalation; he suggested a ‘set of brakes’ to dampen major power rivalry. Beijing should get tough on overcapacity, integrating its business and economic interests with those of the West.

Facing new tariffs, commentators agree Beijing should step up ODI. Exports need not be the sole way to gain market share: greater cooperation should be sought via investment, declares another trade pundit, Tu Xinquan 屠新泉 UIBE (University of International Business and Economics) WTO Research Institute.

Trade ties with partners were indeed bolstered in June. Australia agreed to expand its FTA. Talks began with New Zealand on a negative list for FTA services trade. A BRI cooperation plan was reached with Egypt, and trade cooperation agreements were signed with Malaysia. A new MofCOM document called for greater support for enterprises to benefit from the Regional Comprehensive Economic Partnership.

A newly constituted leading group to promote building a new power system met for the first time on 25 June. The meeting came just days before the basic rules for setting up a nationwide power market take effect on 1 July. The new rules form the cornerstone (‘1’) of the ‘1+N’ system, replacing the basic rules in place since 2005. The new rules make the roles of various technologies within the power system distinct.  

The PRC will account for over half of the world’s newly added renewable energy capacity from 2023–28, forecast the IEA (International Energy Agency). Rising installed capacity keeps local grids under pressure to meet renewable utilisation targets, particularly in resource-rich provinces like Inner Mongolia and Qinghai. Energy authorities relaxed the utilisation rate to 90 percent on 4 June, while building out regulation capacity and flow-up grid projects to ensure renewable energy uptake. One top expert argues that balancing safety, reliability and viability in the new framework entails developing distributed power sources and precise forecasting. 

Energy transition is speeding up. The PRC will account for over half of the world’s newly added renewable energy capacity from 2023–28, forecast the IEA (International Energy Agency). Yet rising installed capacity places local grids under pressure to meet renewable utilisation targets, particularly in resource-rich provinces like Inner Mongolia and Qinghai. Energy authorities relaxed the utilisation rate to 90 percent on 4 June while building regulation and flow-up grid projects to ensure renewable energy uptake. One top expert argues that balancing safety, reliability and viability in the new framework entails developing distributed power sources and precise forecasting. 

The National Science and Technology Conference was held on 24 June. Ding Xuexiang 丁薛祥 was officially revealed as head of the Central Science and Technology Commission, set up last year.

Financing tech ‘self-reliance’ was a focus in June 2024. A State Council executive meeting early in the month enthused over venture capital development, with support measures dropping mid-month. Meanwhile, the China Securities Regulatory Commission (CSRC) launched new measures to promote IPOs for 'hard tech' firms on the STAR Market (Shanghai Stock Exchange's Science and Technology Innovation Board). 

The 'big fund', the heavy-duty state fund for semiconductors, launched a third funding round. At CN¥ 344bn, it exceeded the combined totals of the first (2014) and second (2019) rounds. Discussion of 'patient capital' is next to certain at the Third Plenum.

'Little giants', small and medium enterprises occupying specific tech niches, can expect more support. A thousand selected firms will, promises a three-year action plan, be awarded CN¥ 6 million each.

To help farmers, the heatwave-afflicted Huanghuaihai (Central Northern Plain) region received C¥443 million from MoF (Ministry of Finance). Temperatures averaged 40°C, with some roads and highway surfaces topping 62°C. A key wheat-producing region, it was struck by harvest-threatening 'hot dry winds' in May. Prices have stayed just above the minimum purchase price, raised for 2024, buoyed by central and local reserve purchases, plus major grain dealers buying up over 10 million tonnes. Further large-scale state support for wheat producers is unlikely, warns Farmers Daily. Ag insurance now covers up to 80 percent of output value, confirmed SCIO (the State Council Information Office) in early June.

Further ag support came as ag machinery subsidy guidelines (2024–6) emerged from MARA (Ministry of Agriculture and Rural Affairs) and MoF. The guidelines herald a tiered system, prioritising yield-boosting equipment suitable for hilly regions and filling known gaps. Following 2021–23 trials, ag drone subsidies are now offered nationwide. With inventories hitting 200K in 2023, it is hoped to replicate the subsidy-led expansion of the Beidou GPS system, offered nationwide under the last subsidy cycle, given total Beidou installations on ag machines topped 2 million in 2023.

Yet not all subsidies are smiled upon. As mentioned, EU pork imports came under a MofCOM (Ministry of Commerce) EU pork anti-dumping investigation on 17 June. Subsidies drove the uptick in EU pork imports, claimed Cui Hongjian in the Global Times. Hitting a four-year low in 2023, EU imports were less than a percent of total pork consumption and tended to be high-end. The probe is unlikely to do much to support domestic breeders, reports Yicai

The judiciary and Ministry of State Security targeted Taiwan independence separatists engaging in ‘secession’ in late June. It makes it clear that anything that furthers Taiwan independence is punishable as ‘secession’. Coming in response to Lai Ching-te's 'unpleasant' speeches and actions since he came to power, it echoes provisions of the Criminal Law and the Criminal Procedure Code. More stringent than the Hong Kong National Security Law, its penalties run to capital punishment. Suggesting what may happen to Taiwan citizens straying into PRC-friendly territory, a student who published 'seditious commentary’ on Japanese social media was arrested on her return to Hong Kong in March 2023. 

Meanwhile, Party-building is a growth industry, expanding CPC presence in grassroots communities. Its Organisation Department held a virtual forum in early June 2024, calling for Party units to be set up in delivery and e-commerce platforms. A State Administration of Market Regulation draft Guiding Opinion will welcome couriers into the Party; it urges workers to serve as volunteers alongside their day jobs

Environmental policy was a priority at this year’s Two Sessions; new plans for setting national carbon footprint management have now been announced. Carbon accounting regulations and standards will now apply to hundreds of key products, not least the ‘new three’ (lithium batteries, NEVs, solar PV). The aim is to comply with global standards to protect exports from emerging green trade barriers. Accurate carbon accounting will require significantly improved basic data. 

Subordinate environment departments of NDRC (National Development and Reform Commission) agreed to collaborate better via a new strategic agreement. NDRC is responsible for the national 1+N carbon peaking and neutrality policy, energy conservation and carbon reduction. 

Multilevel care and new regulations on drug and medical service pricing were the primary focus of healthcare reform in June 2024. NHC (the National Health Commission) further reallocated urban medical resources to county-level hospitals. At a subsequent press conference, suggested measures were aired rewarding high-quality medical staff for improving rural hospitals.  

Unethical practices in medical purchases are being corrected by NHC—again. Following up, NHSA (the National Health Security Administration) intensified scrutiny of online and offline drug sales, keeping prices in line with regional procurement. NHC is reforming obstetric services based on demand and difficulty: a ‘good start’, according to Duan Tao 段涛.

On 22 June, the first PRC-France education development forum was held in Paris. Chinese and French universities agreed to collaborate in training students in engineering, nuclear energy, humanities and social sciences. The signing of the 'Sino-French Joint Research Centre for Mathematics' will further enhance cooperation in fundamental sciences between the PRC and France.

To better assist the young and jobless, central ministries issued a dozen new policies to boost jobs for 16–24 year olds. Firms rewarded a small state grant (C¥1,500 per hire) as a token of encouragement.

2024 marks a decade of gaokao (national college entrance exam) reform. Starting on 7 June 2024, 13.42 million registrants took the exams. Recent shifts reflect state promotion of STEM talent and vocational education.

State funding for students at normal universities (teachers’ colleges), led by MoE, aims to raise education ‘quality’ and address teacher shortages, above all in underdeveloped areas. State-funded students must commit to teaching in rural schools for at least six years.
keep in touch with current thinking

sign up for our complimentary monthly roundup