Prospects of the Upcoming Third Plenum of the CPC Central Committee

The Third Plenary Sessions of the 20th Central Committee of the Communist Party of China (CPC) have long served as pivotal moments in China’s modern history, heralding transformative shifts in economic and political policy. From Deng Xiaoping’s groundbreaking reforms in 1978 to Xi Jinping’s ambitious agenda in 2013, each session has left an indelible mark on the nation’s development trajectory. As China stands on the cusp of the upcoming Third Plenum, slated for early July, it confronts a complex array of challenges and opportunities that will shape its future course.

Drawing upon the historical precedents set by past Third Plenums, the upcoming session holds immense significance for China’s continued reform and development efforts. Against the backdrop of a rapidly evolving global landscape and internal pressures, the decisions made during this gathering will not only reflect on past policies but also chart a course for future directions. 

Therefore, the main argument of this essay is to assess the prospects and implications of the upcoming Third Plenum of the 20th Central Committee. By examining the economic, political, and social challenges facing China today, as well as the potential reforms and policies that may emerge from the Plenum, we aim to provide insights into the trajectory of China’s development and its implications for the broader global community. Through this analysis, we seek to understand how the decisions made during the Third Plenum will shape China’s path towards modernization, stability, and prosperity in the years to come.


Temporal and Environmental Background Post-20th National Congress

Despite Xi Jinping’s consolidation of power at the 20th National Congress of the CPC, China finds itself in a turbulent environment, far from a state of “peace and prosperity.” The Zero-COVID policy, implemented in response to the COVID-19 pandemic, faced vehement protests across several cities due to its stringent lockdown measures and their adverse effects on livelihoods. For example, in major urban centers like Wuhan and Guangzhou, where protests were most pronounced, data indicates a significant decline in economic activity and consumer confidence during the height of the protests.

Additionally, hopes for a swift economic recovery following the pandemic-induced downturn were dashed by a series of structural challenges. Sluggish consumption, particularly in the service sector, has persisted despite government stimulus efforts, reflecting deep-seated concerns among consumers about the economic outlook and employment prospects. The real estate market, a key driver of China’s growth in recent years, has faced a crisis of confidence, with property developers grappling with mounting debt and a tightening regulatory environment. This has led to a slowdown in real estate investment and a decline in property prices in some major cities, exacerbating concerns about financial stability.

Furthermore, the departure of foreign enterprises from China, driven by factors such as rising labor costs, supply chain disruptions, and geopolitical tensions, has added to the economic challenges facing the country. Notable examples include the relocation of manufacturing facilities by multinational corporations to other countries in Southeast Asia and South Asia, as well as the scaling back of investments in China by foreign financial institutions and technology companies.

Concurrently, worsening relations between China and the United States have exacerbated geopolitical tensions and raised concerns about the potential for conflict. The Trump administration’s trade war with China, initiated in 2018, has morphed into a broader strategic competition encompassing issues such as human rights, Taiwan, and the South China Sea. The Biden administration, while adopting a more multilateral approach to China, has maintained pressure on Beijing through measures such as sanctions and export controls, reflecting bipartisan consensus on the need to address China’s growing influence and assertiveness.

Amidst these external challenges, Xi’s efforts to consolidate power within the CPC and the military have faced internal resistance. The sudden disappearance of Foreign Minister Qin Gang, a close ally of Xi, and the subsequent lack of information regarding his whereabouts have fueled speculation about factional rivalries and power struggles within the party. Similarly, the dismissal of Defense Minister Li Shangfu, reportedly due to allegations of corruption and disloyalty, has raised questions about the extent of Xi’s control over the military and the potential for dissent within its ranks.

In response to these internal challenges, Xi has intensified his efforts to purge disloyal elements and consolidate his grip on power. The extensive purge within the military, particularly within the Rocket Force established by Xi a decade ago, has targeted high-ranking officials suspected of disloyalty or corruption. The renaming and dissolution of strategic support units within the military, ostensibly aimed at streamlining command structures and improving operational efficiency, have further consolidated Xi’s control over the armed forces and reinforced his authority as the paramount leader of China.


Economic Challenges and Structural Reforms

China’s economic trajectory, once characterized by rapid growth and industrialization, now confronts a series of formidable challenges. While the nation has enjoyed decades of unprecedented economic expansion, recent years have witnessed a slowing of growth rates and the emergence of structural imbalances and inefficiencies. The COVID-19 pandemic has exacerbated these vulnerabilities, exposing weaknesses in China’s healthcare system, supply chains, and social safety nets.

One of the most pressing challenges facing China’s economy is the issue of sluggish consumption. Despite extensive government stimulus measures aimed at boosting consumer spending, particularly in the wake of the pandemic, Chinese consumers remain cautious about their economic prospects. This reluctance to spend reflects broader concerns about income inequality, job security, and the affordability of housing and healthcare.

Another key challenge is the real estate crisis, which has cast a shadow over China’s economic outlook. The property market, long a pillar of China’s growth, is now grappling with a glut of unsold homes, soaring debt levels among developers, and tightening regulatory controls. Rising housing prices have fueled public discontent and raised fears of a property bubble, prompting the government to implement measures to curb speculation and stabilize the market.

In addition to these domestic challenges, China’s economic reform agenda faces external pressures from the deteriorating relations with the United States and other major trading partners. The trade war initiated by the Trump administration and subsequent disputes over issues such as intellectual property rights, market access, and technology transfer have strained bilateral relations and raised concerns about the future of economic globalization.

Xi Jinping’s decision to convene a discussion with prominent liberal economists in Shandong on May 23rd signals a notable shift in China’s approach to economic policymaking. The inclusion of these economists, known for their advocacy of market-oriented reforms and emphasis on reducing government intervention in the economy, underscores Xi’s recognition of the need for diverse perspectives in shaping economic policy.

Since the era of Deng Xiaoping’s reforms in the late 1970s, liberal economists such as Zhou Qiren have played a prominent role in shaping China’s economic policies. Advocating for market-oriented reforms and greater openness to foreign investment, these economists have often clashed with more conservative factions within the party who favor a more state-centric approach to economic management.

The participation of liberal economists in the upcoming Third Plenum holds significant implications for China’s economic reform agenda. Their presence suggests a willingness on the part of Xi Jinping’s administration to consider alternative viewpoints and explore new approaches to addressing the country’s economic challenges. By inviting these economists to share their insights and recommendations, Xi is signaling a potential shift towards a more market-driven and reform-oriented economic strategy.

As a representative figure of the reformist faction within the CPC, Zhou’s insights and recommendations offer valuable insights into the ongoing debates surrounding economic reform and development in China.

Zhou Qiren’s longstanding reputation as an advocate for market-oriented reforms and his past involvement in shaping economic policies lend weight to his remarks at the discussion. As a professor at Peking University’s National School of Development, Zhou has been at the forefront of advocating for liberal economic principles, emphasizing the importance of reducing government intervention and fostering a more open and competitive market environment.

During the discussion, Zhou Qiren emphasized the need for comprehensive reforms aimed at reducing institutional barriers and empowering ordinary citizens to benefit from economic changes. His proposition to prioritize the public’s sense of gain resonated with many, reflecting widespread concerns about the unequal distribution of wealth and opportunities in Chinese society.

The Financial Times pointed out that Zhou Qiren’s remarks were one of the signals of the upcoming Third Plenum of the CPC. His advocacy for reducing institutional costs to enhance the public’s sense of gain from reforms underscores China’s determination to continue market-oriented reforms, aligning with the spirit of Xi Jinping’s speeches.

Moreover, Zhou Qiren’s participation in the discussion highlights the evolving nature of policy debates within the CPC. Zhou’s presence signals a potential shift towards a more market-driven and reform-oriented economic strategy. His insights and recommendations are likely to inform the agenda and deliberations of the Third Plenum, offering a valuable perspective on the path forward for economic reform and development in China.

However, it’s important to recognize that the inclusion of liberal economists in the discussion does not necessarily indicate a wholesale endorsement of their views by the CPC leadership. China’s economic policymaking process is characterized by complex political and ideological dynamics, with various factions vying for influence and power. While Xi may be open to incorporating some of the ideas put forward by liberal economists, he is likely to balance these with considerations of political stability, social cohesion, and the preservation of party control.

Moreover, the participation of liberal economists in the Third Plenum discussion is likely to spark broader political and ideological debates within the CPC. The question of how to balance economic reform with the party’s overarching goal of maintaining political control and ideological coherence is likely to be a central point of contention. While some within the party may argue for greater liberalization and openness to market forces, others may advocate for a more cautious approach that prioritizes stability and social harmony.


The Specific Outline of the Third Plenum

Xi Jinping’s recent speech at the discussion in Shandong on May 23rd is widely regarded as setting the tone for the upcoming Third Plenum of the 20th Central Committee. The People’s Daily, the official newspaper of the CPC, published a series of articles from May 26th to 29th, further interpreting Xi Jinping’s speech and revealing the contours of the Third Plenum.

In his speech, Xi Jinping emphasized the need to start from the strategic overall situation of the development of the party and state affairs, focusing on the central tasks of the entire party and people. He elaborated on a series of significant theoretical and practical issues for further comprehensive deepening of reforms, emphasizing the importance of adhering to the theme of promoting Chinese-style modernization, highlighting reform priorities, grasping value orientation, and emphasizing methods and approaches to add impetus to accomplishing the central tasks and achieving strategic goals.

Economic system reform has become a top priority for China. With changes in the global economic environment, structural issues within China’s internal economy are becoming increasingly prominent. Issues such as sluggish consumption, a weak real estate market, and tepid investment growth not only hinder further economic development but also pose potential threats to China’s social stability.

Xi Jinping’s speech underscored the urgency of addressing these challenges through comprehensive economic reforms. He emphasized the need to deepen reforms across various sectors of the economy, including finance, taxation, land, labor, and social security. Specific measures outlined by Xi include enhancing the role of market forces in resource allocation, promoting innovation and entrepreneurship, and strengthening regulatory oversight to prevent financial risks.

State-owned enterprise (SOE) reform will be one of the key focuses of the Third Plenum. For years, state-owned enterprises have played a pivotal role in China’s economy, but inefficiencies and irrational resource allocation within these enterprises have been persistent problems. Promoting SOE reform to enhance efficiency is thus a crucial aspect of China’s economic reform agenda.

Xi Jinping’s speech highlighted the importance of restructuring and revitalizing state-owned enterprises to improve their competitiveness and efficiency. He emphasized the need to deepen reforms in key sectors such as energy, telecommunications, and transportation, and to encourage mixed ownership and market-oriented management in state-owned enterprises. Additionally, Xi stressed the importance of strengthening corporate governance and accountability mechanisms to ensure that state-owned enterprises operate in a transparent and efficient manner.

The significance of private enterprises in China’s economy cannot be overlooked. In recent years, private enterprises have faced challenges from various quarters, including policy uncertainties and difficulties in financing. Creating a more equitable and transparent business environment for private enterprises and stimulating their innovation vitality will be an important direction for China’s economic reform.

Xi Jinping’s speech acknowledged the importance of supporting the development of private enterprises and fostering a level playing field for all types of ownership. He emphasized the need to remove institutional barriers and discriminatory practices that hinder the growth of private enterprises, such as unfair competition, arbitrary administrative intervention, and inadequate protection of property rights. Additionally, Xi called for measures to improve access to financing for small and medium-sized enterprises, promote technological innovation, and enhance the protection of intellectual property rights.


Future Observations

 The CPC has a tradition of convening major conferences to address significant issues and resolve them. The long-delayed Third Plenum, now slated for mid to late July, finally approaches after months of anticipation. However, the delay has prompted speculation about the reasons behind it and the potential implications for the decisions to be made during the conference.

The announcement from the Central Political Bureau meeting on April 30th, which scheduled the Third Plenum for July, has raised questions about whether the major issues under discussion have already been resolved, awaiting only formal discussion and resolution during the conference. Some analysts suggest that the delay may indicate a need for further deliberation and coordination among CPC leaders, particularly in light of the complex and interconnected nature of the economic and political challenges facing China.

Moreover, the timing of the Third Plenum in late July coincides with several other significant events that could impact its proceedings and outcomes. Late July marks the peak of the North China rainy season, known as the “Seven Down, Eight Up” period, which is crucial for flood prevention efforts in the region. The need to address environmental concerns and ensure the safety and well-being of the population may influence the agenda and priorities of the Third Plenum.

Furthermore, the opening of the Paris Olympics on July 26th will attract global attention and may overshadow the proceedings of the Third Plenum. As world leaders gather in Paris to celebrate the spirit of international cooperation and sportsmanship, the eyes of the world will be on China and its leadership as they navigate the complexities of economic reform and development.

The decisions made during the Third Plenum are expected to have far-reaching implications for governance and political stability in China. Xi Jinping’s consolidation of power and centralization of decision-making authority have been key features of his leadership, and the session is expected to reinforce these trends. Potential adjustments to the political and administrative structures may be announced to enhance governance efficiency and policy implementation, further solidifying Xi’s position as the paramount leader of China.

Moreover, the outcomes of the Third Plenum will be closely watched by the international community. China’s policy directions and reforms will have significant implications for global trade, investment, and geopolitical dynamics. The session’s decisions on economic reforms, technological development, and environmental policies will influence China’s interactions with other countries and its role in the global economy.

In addition to addressing immediate challenges, the Third Plenum is likely to outline China’s long-term vision and strategic goals. This may include the pursuit of “common prosperity,” a key theme emphasized by Xi Jinping, which aims to create a more equitable society with shared economic benefits. Policies to support this vision, such as progressive taxation, social welfare programs, and measures to reduce regional disparities, may be introduced during the conference.

Ideology and party control will continue to play a crucial role in shaping China’s policy directions. Xi Jinping’s emphasis on Marxist-Leninist principles, socialist values, and the centrality of the CPC in all aspects of governance will be reinforced. New ideological education campaigns and initiatives to strengthen party discipline and loyalty may be announced, further consolidating Xi’s authority and vision for China’s future.

陳建甫博士、淡江大学中国大陸研究所所長(2020年~)(副教授)、新南向及び一帯一路研究センター所長(2018年~)。 研究テーマは、中国の一帯一路インフラ建設、中国のシャープパワー、中国社会問題、ASEAN諸国・南アジア研究、新南向政策、アジア選挙・議会研究など。オハイオ州立大学で博士号を取得し、2006年から2008年まで淡江大学未来学研究所所長を務めた。 台湾アジア自由選挙観測協会(TANFREL)の創設者及び名誉会長であり、2010年フィリピン(ANFREL)、2011年タイ(ANFREL)、2012年モンゴル(Women for Social Progress WSP)、2013年マレーシア(Bersih)、2013年カンボジア(COMFREL)、2013年ネパール(ANFREL)、2015年スリランカ、2016年香港、2017年東ティモール、2018年マレーシア(TANFREL)、2019年インドネシア(TANFREL)、2019年フィリピン(TANFREL)など数多くのアジア諸国の選挙観測任務に参加した。 台湾の市民社会問題に積極的に関与し、公民監督国会連盟の常務理事(2007年~2012年)、議会のインターネットビデオ中継チャネルを提唱するグループ(VOD)の招集者(2012年~)、台湾平和草の根連合の理事長(2008年~2013年)、台湾世代教育基金会の理事(2014年~2019年)などを歴任した。現在は、台湾民主化基金会理事(2018年~)、台湾2050教育基金会理事(2020年~)、台湾中国一帯一路研究会理事長(2020年~)、『淡江国際・地域研究季刊』共同発行人などを務めている。 // Chien-Fu Chen(陳建甫) is an associate professor, currently serves as the Chair, Graduate Institute of China Studies, Tamkang University, TAIWAN (2020-). Dr. Chen has worked the Director, the Center of New Southbound Policy and Belt Road Initiative (NSPBRI) since 2018. Dr. Chen focuses on China’s RRI infrastructure construction, sharp power, and social problems, Indo-Pacific strategies, and Asian election and parliamentary studies. Prior to that, Dr. Chen served as the Chair, Graduate Institute of Future Studies, Tamkang University (2006-2008) and earned the Ph.D. from the Ohio State University, USA. Parallel to his academic works, Dr. Chen has been actively involved in many civil society organizations and activities. He has been as the co-founder, president, Honorary president, Taiwan Asian Network for Free Elections(TANFREL) and attended many elections observation mission in Asia countries, including Philippine (2010), Thailand (2011), Mongolian (2012), Malaysia (2013 and 2018), Cambodian (2013), Nepal (2013), Sri Lanka (2015), Hong Kong (2016), Timor-Leste (2017), Indonesia (2019) and Philippine (2019). Prior to election mission, Dr. Chen served as the Standing Director of the Citizen Congress Watch (2007-2012) and the President of Taiwan Grassroots Alliance for Peace (2008-2013) and Taiwan Next Generation Educational Foundation (2014-2019). Dr. Chen works for the co-founders, president of China Belt Road Studies Association(CBRSA) and co-publisher Tamkang Journal of International and Regional Studies Quarterly (Chinese Journal). He also serves as the trustee board of Taiwan Foundation for Democracy(TFD) and Taiwan 2050 Educational Foundation.