The head of the People’s Republic of China, Xi Jinping, will present his vision of the concept within which the development of the economic system of the Asian country should be carried out.
The economic paradigm of the Chinese leader will be presented during the completion of the twice-a-decade reform conclave. It is worth noting that in the current month, Beijing has been forced to take urgent measures to revive the intensity of domestic demand. The relevant decisions of the leadership of the Asian country are related to the weak growth indicators of the Chinese economy. In the second quarter of the current year, the local economy grew by 4.7%. The National Bureau of Statistics released the relevant information on Monday, July 15. It’s worth noting that the growth rate of China’s economy, recorded in April-June of the current year, turned out to be the slowest since the first quarter of 2023. Also, in this case, there is a kind of regression. The corresponding wording in the context of the description of the present state of affairs means a significant slowdown in economic growth in the second quarter of the current year relative to the indicators of the first quarter when the appropriate process demonstrated an upward dynamic, fixed at 5.3%. Also, the result for April-June 2024 largely did not coincide with the more positive preliminary expectations. For example, experts interviewed by the media predicted that the Asian country’s economic system would show growth of 5.1% in the second quarter of the current year.
This week, the Chinese leadership will publish a document outlining the position of the central government of this state regarding the present economic situation, the quality of its condition, further prospects and measures to be taken against the background of the observed circumstances. This document which, within the framework of a kind of tradition, contains very abstract and to some extent lengthy formulations and describes the state of affairs in the paradigm of a generalized manner of thinking, will allow experts to form a preliminary idea of what exactly was discussed by 400 officials behind closed doors in Beijing in the current week. A few days later, a communique is expected to be released. The tradition of Chinese state communicative interaction with society provides that the communique contains more specific and unambiguous formulations and statements about how the leadership of an Asian country assesses the state of affairs in the space of economic reality and which concepts of action it perceives as the most constructive and appropriate in terms of responding to the circumstances of an up-to-date historical moment.
The media suggest that Xi Jinping, in the context of his vision of an economic approach, will focus on high-quality growth. In this case, the main structural elements of the movement towards the growth of indicators are likely to be technologies. Also, according to the media, Xi Jinping will mention Chinese-style modernization. It is possible that the interpretations contained in his statements will stylistically resemble slogans or extensive verbal expressions of meanings, characterized by an uncritical, but still lack of specificity.
The opinion is very actively circulating in the expert community that the head of the People’s Republic of China, in the context of his concept of the development of the economic system of an Asian country, will focus on such a somewhat more global goal as the formation of more equitable social arrangement based on advanced manufacturing. Xi Jinping believes that the implementation of a set of appropriate measures will significantly increase Beijing’s resilience to trade restrictions from Washington.
It is worth noting that at present, autonomy in the broad sense of the term is becoming what can be described as a vital necessity for China. The current state of affairs in the space of geopolitics is characterized by an increase in tension. China turned out to be one of the territories in which the material manifestations of the corresponding tendency are the most sensitive and noticeable. Washington has already limited and plans to continue to limit supplies to the Asian country of advanced chips and equipment necessary for the production of microcircuits of the appropriate category. The United States has repeatedly declared its intention to restrict China’s technological potential. Against this background, a kind of self-sufficiency is extremely important for Beijing for full-fledged development, including in the context of industry and from the perspective of the general economic dynamic. China needs to provide for itself in the elaborating of advanced technologies, without relying on supplies from other countries. In conditions of geopolitical tension, countries with autonomous provision of needs related to both the general progress in the process of the existence of the state and the development in the separate spheres of activities will be in the most advantageous position. It is worth noting that at present, global segmentation based on the principle of uniting countries into separate blocks is not an unambiguous and objective reality, but there is a corresponding probability. At the same time, for China, geopolitical tensions, primarily related to restrictions from Washington, are already a source of sensitive consequences that need to be responded to.
Technological sovereignty is also extremely important for Beijing. Currently, new-generation technologies are the main driving force of global progress as a process of moving forward in the development of human civilization. Also, without such advanced solutions, production achievements are impossible.
This week, the state media of the Asian country published information materials containing the theses formulated by Xi Jinping in the context of arguments on the topic of economics. According to these data, the head of the People’s Republic of China adheres to the point of view that the advancing of modernization requires the preservation of independence and must rely on maintaining self-reliance. In fact, these formulations indicate that Xi Jinping is aware of the importance of autonomy in the context of the development prospects of an Asian country. To a certain extent, this position is a logical reaction to the external world environment. The head of the People’s Republic of China, according to data released by local media, reckons that the Asian country should develop on its own and maintain firm confidence in future positive results and progress.
The last time in China, a fundamental discussion of the vector of existence of the state took place in 2013. Moreover, five years later, Xi Jinping refused to take part in a meeting dedicated to making important policy decisions.
As for China’s economic prospects, in the context of the corresponding issue, it is necessary to mention the long-term crisis in the local real estate sector, which turned out to be longer than the preliminary expectations regarding its specifics and is gradually moving into the category of structural problems of large-scale impact. Currently, Beijing is witnessing such an economic reality as a deflationary streak. The mentioned state of affairs turned out to be the longest in the last 25 years. Also, the Chinese leadership is currently striving to implement measures aimed at countering the negative tendency of population decline.
So far, there is no official information about what actions Beijing intends to take to form an environment favorable for economic development. According to preliminary data released by the media, the set of relevant measures includes solutions such as the revision of the consumption tax to increase the income of municipal authorities by charging fees on luxury goods, reforming the local registration system, known as hukou, and strengthening support for artificial intelligence. The extent to which this information corresponds to Beijing’s real intentions is unknown. It is worth noting that Chinese authorities traditionally adhere to the tactic of silence in the framework of communicating with society on the topic of its plans.
The communique of the Third Plenum, which is the mentioned meeting of policymakers on China’s development, may contain a hint of measures to strengthen the finances of municipal authorities. The corresponding assumption was made by David Li Daokui, a professor at Tsinghua University in Beijing and a policy adviser to the government, during a conversation with media representatives. The expert also did not rule out the possibility that the central authorities may increase sales of government bonds.
Moreover, a realistic assumption is that, as part of stimulating economic development, Beijing will take measures that will mean the realization in the material space of the thesis about the importance of private enterprises. Presumably, this approach will be stated in the communique, as reckons David Li Daokui. The expert also says that the communique may contain formulations on stimulating consumption. David Li Daokui said that Beijing’s mentioned intentions could lead to tax reform.
In the context of China’s economic prospects, the electric vehicle manufacturing sector and the green energy area are also of particular importance. The measures of the authorities in the Asian country in the appropriate direction will be the focus of attention both in the internal space of the state and at the global level. It is worth noting that Western countries have recently complained that the flow of cheap exports from China threatens jobs. The authorities of the European Union have imposed tariffs on the supply of electric vehicles from an Asian country. At the same time, former President of the United States Donald Trump announced his intention to impose a 60% tax on goods from China if re-elected in the November elections.
For a positive configuration of the future of the state, Beijing should solve the problem of the crisis in the real estate sector. Also, for the full development of the Asian country, technological sovereignty must become a reality. Moreover, Beijing has to overcome local fiscal strains. Successfully responding to all specified challenges in the medium and long term will enable Beijing to achieve its high-quality development goals.
It is widely believed among experts that the Chinese authorities will not announce important policy changes in the foreseeable future that would be comparable to the decisions envisaged by the path to the openness of the Asian country’s economy, which was paved by the former paramount leader of the state Deng Xiaoping.
In 2013, Xi Jinping announced plans for ambitious and large-scale reform. Relevant intentions included further loosening the one-child policy and encouraging private investment in state businesses. These plans have not been fully implemented. An external factor has become an obstacle to the materialization of the relevant intentions. Against the background of the deteriorating situation in the space of geopolitical relations, there have been changes in the hierarchy of priorities of the top leadership of the Asian country. Against the background of the current state of affairs in the international area, Beijing has begun to pay more attention to national security issues.
Currently, the authorities of the Asian country are betting on industry, which should become the main driving force of economic development in the present historical period following the coronavirus pandemic. At the same time, Beijing ignores analysts’ calls to rebalance the economy by increasing domestic spending. At the same time, stimulating consumer activity belongs to the category of difficult tasks. The crisis in the real estate sector has become a factor with a negative sensitive impact on the financial well-being of Chinese residents. Against the background of this situation, policymakers focused on corporate investments.
It is worth noting that Beijing is responding to the crisis in the real estate sector and does not deny the existence of a corresponding problem. The leadership of the Asian country has provided a package worth $41 billion to municipal authorities for the buying of new units already built and the conversion of these areas into affordable housing. This decision by Beijing was perceived by experts as a step towards improving the situation in the real estate market.
The termination of the downturn in the space of the Chinese economic system will become a reality when the financial injections of the leadership of the Asian country become more significant than, for example, the mentioned measures.
A meeting of the Politburo, consisting of 24 people, will be held in China in July. It is expected that economic issues will be the main topic of discussion during this meeting.
Australia & New Zealand Banking Group Ltd. economists including Raymond Yeung wrote in a note last week that comprehensive reforms require coherent direction in various policy areas. According to them, the third plenum may be an opportunity to overcome piecemeal measures.
