The Third Plenum: road map for China’s economic development
One of the most important events in the Chinese political calendar, the Third Plenum of the 20th Central Committee of the Chinese Communist Party, concluded last week.
While the third plenum is held every five years, this is the first time that the economy has been the central theme (rather than reform of the Party or governance) since 2013. In the face of a fundamentally different domestic and global environment since that time, the meeting was an opportunity for the 205 members and 171 non-voting members of Party’s Central Committee, chaired by Xi Jinping, to review the changed circumstances and lay the groundwork for President Xi Jinping’s plans to achieve China’s 2035 interim goals on the pathway to the great rejuvenation of the nation by 2049, when the People’s Republic of China will celebrate its 100th anniversary.
The meeting was held behind closed doors but a short communique outlining the key decisions was issued in English and in Chinese. More detailed documents and a fuller picture will emerge in the coming months, with specific policy changes likely to filter through the layers of government over time.
ACBC will be monitoring these developments closely and will provide commentary and curate events to help our members interpret the changes. For the moment, although there were no major new reforms announced, the plenum marks a pivotable shift in China’s growth model and sets the stage for China’s next five-year plan (2026 – 2031).
What’s changing? Four points stand out in ACBC’s initial assessment.
The first is China’s ambition to achieve technological leadership in key sectors and the emphasis on ‘new quality productive forces’ to support innovation in the domestic economy. Until recently, Beijing’s economic and industrial policies have largely been based on accelerating progress in catching up to existing technologies and achieving self-reliance in response to an increasingly challenging external environment. Looking ahead, the communique (and other recent announcements) highlight China’s ambition to become a global champion of innovation through generating disruptive technology and scaling up into high-end manufacturing. The booming electric vehicle (EV), battery and solar panel sectors are good examples of industries that have already propelled China to a global leadership position.
The second is a focus on a ‘new national system’ to acquire the needed technologies by pulling all available national resources together in supporting home-grown technology breakthroughs, especially in those sectors with strategic significance. Previous industrial policies mostly focused on expanding global market share for China’s own exports. This new term calls for the government and enterprises to lead future industries that are in the nascent stage at a global level.
The third is the emphasis on practical policies that benefit peoples’ livelihood, education, healthcare, housing and childcare (all areas that align with areas of Australian expertise). The announcement a few weeks ago on the need for hearing tests to be extended from children to older folk will be music to the ears of one Australian hearing implant company, as well as others in the health, wellness, aged care and related services sectors.
The fourth point of note is the reassurance provided to foreign businesses that policies will be expanded to encourage foreign investment. There will be a further reduction in the negative list for foreign investment and more incentives offered to do business in the country’s free-trade zones. There are statements reiterating the importance of the private sector, which are clearly directed at rebuilding confidence in the local markets and entrepreneurs. In Australia, this message has already been conveyed during the high-level visits by Premier Li Qiang, Foreign Minister Wang Yi, Commerce Minister Wang Wentao, CCPIT Chairman Ren Hongbin and a number of provincial delegations.
The strategic implications of these policy changes cannot be underestimated. Australian businesses that have an international outlook or engagement with China should be investing time into considering what China’s new growth model might mean for them. Adapting to these developments will be essential for navigating China’s evolving economic landscape and seizing future growth opportunities.
