Both ways: the third plenum promises reforms and doubles down on Xi’s grand vision

After an unusual nine-month delay that led to speculation about friction at the top of the Chinese Communist Party (CCP), the Third Plenary Session of the 20th Central Committee gave full support to top leader Xi Jinping’s grand vision for a technology driven socialist future. The Third Plenum used a short communiqué, a longer “resolution document” outlining 300 measures to be addressed by 2029, and a statement from Xi themselves to show the way forward. Despite adjustments in reporting in response to rising social and financial tensions due to a weak economy, there should be no illusions about the direction of travel that Xi has set for the country.

In an example of ideological legacy-building, the 205 voting members of the Third Plenum doubled down on Xi’s vision for China’s modernization – high-quality economic growth driven by high-tech focused on “new quality productive forces” and economic self-reliance under the CCP’s ever-wise leadership . More mundanely, they also promised better treatment of the private sector by improving access to investment and reducing market restrictions, improving social security, easing the plight of rural migrants, creating jobs for university graduates, reforming the tax system and improve public finances. to help local authorities meet their welfare obligations. There was little recognition that these promises compete for the party-state’s attention and funding.

Reason to be careful with the implementation

The Third Plenum has traditionally set the course for China’s economic trajectory over the next five to ten years. It is a message to state officials and CCP cadres about the broad goals that all their daily actions must work towards – and a signal to the world. Many of the “300 measures” may seem small compared to Xi’s macro-level vision outlined at the plenum, yet they would have a significant impact on their respective policy areas, promising tangible benefits over the next five years for citizens and businesses are caught in the crisis. a post-pandemic economic slump. But there are good reasons to be cautious about the chances of consistent implementation.

First, the abundance of commitments makes the Central Committee’s messages contradictory. As during Xi’s first Third Plenum in 2013, the need to strengthen market mechanisms and renew the financial system to make resource allocation more efficient emerged again. But it also stipulated that the CCP would determine the direction and degree of freedom for the markets. Likewise, promises to help the private sector should be seen in the context of the expectation that private enterprises can channel their potential toward national strategic goals, just as state-owned enterprises have been mandated to “pursue original innovation” for the common good . A sensible distinction between state and private enterprises in strategically relevant sectors is becoming increasingly difficult.

Second, the devil is in the details. By identifying a series of specific measures targeting socio-economic issues, the CCP leadership demonstrated its awareness of China’s many current challenges. But this does not mean that every step will be completed by 2029 – or at all. The Third Plenum in 2013 also promised a long list of reforms, but implementation often stagnated due to a lack of resources and the dragging of vested interests, especially in the areas of internal migration, social security and fiscal reforms. Securing the CCP’s political-cultural hegemony through “public opinion guidance” and continued expansion of “national security” mechanisms means greater political control and appears to be a drain on resources.

Third, the “decision document” contained a number of tactical omissions, perhaps to obscure the contradictions between implementing Xi’s high-tech vision and solving current problems. Relatively little emphasis was placed on scientific and technological ‘self-reliance’, a policy mainstay of recent years. It also made no mention of the patriotic and geopolitically oriented concept of a “new type of system for the whole nation,” but promised more autonomy for scientists. But this promise must be seen in the context of the party-states’ exhortations to scientists to roll up their sleeves and focus on their strategic objectives.

Xi is determined to stay the course despite mounting challenges

Finally, the Third Plenum resolutions should be read in conjunction with Xi’s personal explanation, which will serve as a guide to their interpretation and implementation. Xi sees the economy in a period of transition, but is determined to stay the course despite growing challenges. This is a signal for the party-state to prioritize its grander modernization vision over other structural policy adjustments.

The prioritization of science and technology is rooted in the pursuit of geopolitical power. It also reflects a realization that China’s economy still faces productivity problems, which Beijing hopes to address through advanced technology such as artificial intelligence and by improving financial markets.

Crucially, despite notable progress in domestic innovation in some areas, China is still dependent on foreign technology, which is harder to obtain due to Western export controls. Moreover, Xi’s vision of an innovation-driven economy requires the country to become much better at making new high technology quickly available to all industries. Xi needs domestic technological breakthroughs to boost industrial modernization and the development of “autonomous and controllable” supply chains in semiconductors, software and other key areas – a goal that reflects the Third Plenum’s focus on reforming the innovation system and the development of talent.

Giving new meaning to ‘reform and opening’

Given the delay in the Central Committee meeting for the Third Plenum, the most remarkable achievement was the consistency with which it adhered to Xi’s grand plan for China. The resolutions showed no sign of compromise on the part of the CCP General Secretary; If anything, they reinforced his overall vision of China’s modernization. While the Third Plenum checked many boxes in addressing current concerns and seeking to meet calls for reform, it also aimed to formulate a counter-narrative to divert attention from a resolutely unchanged course. Although the CCP leaders had doubts about Xi’s approach in recent months, they are now firmly back in line.

“Reform and opening up” have shifted under Xi from boosting economic development to strengthening China’s ability to go it alone and prepare the country for whatever crisis and conflict the future may bring. The Third Plenum’s goal to “build a national strategic hinterland” demonstrates the CCP’s willingness to sacrifice the economic benefits of efficiency for the geopolitical benefits of greater resilience. Beijing is also committed to export-led growth, reversing promises of a consumption-led economy.

As in previous rounds of ‘reformation’ under Xi, there will be winners. But the majority of citizens and private businesses, including foreign ones, will not see their fortunes improve anytime soon. They will continue to contend with nationalist policies and increasing geopolitical friction.