After months of speculation, the major meeting to set China’s economic course scheduled for the fall is finally taking place from Monday, July 15. Four days to reassure foreign investors in a difficult context. The challenges are numerous for the world’s second-largest economy: slumping consumption, difficulties in leading industrial sectors, territorial inequality, and a fractured domestic market. Will we see major reforms? What can come out of this meeting, which is being held behind closed doors?
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It’s hard to be more opaque than the summits of the Chinese Communist Party. Little has leaked before the highly anticipated economic high mass of the third term of Xi Jinping. While observers are waiting for strong signals on the major projects that should help guarantee sustainable growth, the Prime Minister Li Qiang warned that he intended to apply alternative medicine.
A cautious approach, because it is necessary to pursue contradictory objectives: to reduce the significant debt of local governments while promoting the consumptionwithout increasing social assistance. Unify the national market, segmented by regional protectionism. A new reform of the hukou, this famous “internal passport” which transforms migrants from the countryside who come to work in the big cities into second-class citizens, could go in this direction. But this risks creating strong social tensions and discontenting the urban middle classes. The same goes for pensions. The aging of the population increases the pressure on public finances.
Themes that were largely already present at the third plenum in 2013. At the time, party officials had launched major reforms, particularly to reduce state intervention in the economy. Ten years later, the practice is still in vogue.
In the RFI archives3rd Plenum of the Chinese Communist Party: Promises while waiting for reforms
An economic recovery that does not live up to expectations
A year and a half after the lifting of health restrictions linked to Covid-19, the Chinese recovery is not really living up to expectations. Among the black spots, a gap between internal consumption, very weak, and plethora of exports, which continue to increase while the UNITED STATES and Europe are increasingly closing their markets to Chinese products.
” It’s a bit of a schizophrenic situation. “, explains Alicia Garcia-Herrero, chief economist for Asia Pacific at Natixis. Because China imports almost nothing, it only exports. And this leads to a very surplus trade balance. This growth model is not sustainable, because the rest of the world is starting to react. »
The United States and theEuropean Union have recently sharply increased their customs duties on electric cars, for example. The EU has also opened an investigation into the subsidies paid by Beijing to Chinese manufacturers. However, President XI Jinping does not seem ready to take measures to stimulate the country’s internal consumption, regrets Alicia Garcia-Herrero.
“ The logical reaction would be for him to say to himself:They are closing our doors to the outside world, so we are going to take measures to stimulate consumption and make it a driver of growth.“But the most likely outcome is that China will continue to encourage industrial production of high value-added goods. »
Continue to focus on exports, at the risk of remaining fairly exposed to protectionist reactions from the United States and Europe.
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“We see less and less debate within the CCP”
Under Xi Jinping, these meetings of the Chinese Communist Party have also been an opportunity to reaffirm the loyalty due to the party and its leader. An omnipresent notion with negative consequences according to Jérôme Doyon, assistant professor at the Center for International Relations Studies at Sciences-Po.
“ One of the important effects is that we see less and less debate within the CCP, we are talking about 100 million people, so there are necessarily divergent opinions, people who do not think like the others, but they have less and less room to express these divergences because by expressing an opinion, we always run the risk that this opinion is not politically correct. It is a problem to realize who is in disagreement and even ultimately ” he explains.
Then Jérôme Doyon adds: “ The party-state leadership does not realize who agrees and who does not, because in front of them, we are not going to express a divergent opinion, the risk being to get caught by the anti-corruption campaign, by the disciplinary apparatus of the party. So there is an echo chamber effect, where everyone repeats what they think they are supposed to say, what the leader wants to hear, and so it can have a negative effect on the public policies that are implemented.. »
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