China Designs an Economic Road Map All the Way to 2029
The plenum could be easily interpreted as a calculated exercise in Taoist patience… When the term “reform” appears no less than 53 times in the final communique, that means – contrary to Western proselytism – that the CPC is dead set on improving governance and increasing efficiency.
By Pepe Escobar at Sputnik.
HONG KONG – There can hardly be a better place to track the four-day, twice-a-decade plenum of the Communist Party of China than dynamic, “one country, two systems” Hong Kong.
Hong Kong is right at the heart of East Asia – halfway between Northeast Asia (Japan, the Koreas) and Southeast Asia. To the west is not only China but the Eurasia landmass, linking it to India, Persia, Turkiye and Europe. To the east, sailing forward, is the Pacific and the US’s West Coast.
Moreover, Hong Kong is the ultimate multipolar, multi-nodal (italics mine) hub: a frenzied global metropolis forged by trade routes going back centuries, attracting people from every latitude keen on interconnecting commerce, ideas, technologies, shipping, commodities, markets.
Now, reinvented for 21stcentury Eurasia integration, Hong Kong has all it takes to profit as a key node of the Greater Bay Area, the southern hub propelling China to economic superpower status.
The plenum in Beijing was a quite serious/sober affair – trying to strike a balance between sustainable economic growth and national security all the way to 2029, when the PRC celebrates its 80th anniversary.
The proverbial comprador elites, 5th columnists and outright Sinophobes across the West have gone bonkers on the current slowdown of the Chinese economy – complete with slumps in the financial and property fronts – running in parallel to all hybrid war strands of Chinese containment emanating from Washington.
Fact: China’s GDP grew roughly 5% in the first semester; and the final plenum communique, released at the end of the four-day meeting, stressed that this should remain the “unwavering” target for the second semester.
The official rhetoric of course was heavy on stimulation of domestic consumption, and “new momentum” to drive exports and imports.
This key passage in the final communique breaks it all down when it comes to the new iteration of “socialism with Chinese characteristics”:
“We must purposefully give more prominence to reform and further deepen reform comprehensively with a view to advancing Chinese modernization in order to better deal with the complex developments both at home and abroad, adapt to the new round of scientific and technological revolution and industrial transformation, and live up to the new expectations of our people.
It was stressed that, to further deepen reform comprehensively, we must stay committed to Marxism-Leninism, Mao Zedong Thought, Deng Xiaoping Theory, the Theory of Three Represents, and the Scientific Outlook on Development and fully implement Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era.
We must thoroughly study and implement General Secretary Xi Jinping’s new ideas, viewpoints, and conclusions on comprehensively deepening reform and fully and faithfully apply the new development philosophy on all fronts.”
And to make it more simple, Xi actually explained it all in some detail.
Those Pesky ‘Markets’
Nowhere around the world one finds a government focused on devising five-year plans for economic development (Russia now seems to be engaged in its first attempts) – encompassing development of rural land, tax reform, environmental protection, national security, the fight against corruption, and cultural development.
When the term “reform” appears no less than 53 times in the final communique, that means – contrary to Western proselytism – that the CPC is dead set on improving governance and increasing efficiency. And all those targets must be met – otherwise heads will roll.
Science and technology will once again have pride of place in China’s development, a sort of follow-up to the Made in China 2025 strategy. The emphasis predictably will be on better integration of the digital economy into the real economy; infrastructure upgrading; and boosting “resilience” in the industrial supply chain.
It’s fascinating to watch how the communique emphasizes the necessity to “correct market failures” – which is a euphemism for reigning in turbo-neoliberalism. What is stressed is “unswerving support and guidance” to the development of the “non-state sector”, with Beijing ensuring “all forms of ownership” in the economy competing fairly and lawfully “on an equal footing”.
The plenum could be easily interpreted as a calculated exercise in Taoist patience. According to Xie Maosong, from the China Institute for Innovation and Development Strategy at the Chinese Academy of Sciences,
“Xi said many times that the easy part of the reform is over, and now we are in uncharted waters. The party must watch its step, particularly as the external risks build. We are also touching the vested interests of many groups.”
Of course turbo-capitalist Hong Kong’s main obsession is “markets”. Conversations with British traders scouting Asia for their clients reveal they are not so keen on investing in China – yet that does not faze Beijing’s planners. What matters for the Politburo is how to meet the economic, social, environmental and geopolitical targets set by Xi for the next five years. It’s up to the markets to adapt to it.
Of course Beijing planners are already factoring Trump in the overall equation. The Western mantra that China’s economy is struggling to stabilize may be debatable. Yet China’s economy may be in fact in a more precarious position now than when Trump unleashed his trade war in mid-2018. The yuan may seem to be under more pressure because of the gap between US and Chinese borrowing costs.
According to a JPMorgan estimate, every 1% tariff hike during the 2018-2019 period of the US-launched trade war was linked to a 0.7% rise of the US dollar versus the yuan.
Trump plans to impose a 60% tariff on virtually all Chinese products. That would lead to an exchange rate of roughly 9 yuan to the dollar, 25% weaker than now.
Now Read the Whole Thing and Get to Work
It’s enlightening to check what Hong Kong’s chief executive, John Lee, said about the plenum. He encouraged “all sectors of the community” to read the communique. And the Hong Kong business elite did get the drift: they interpreted it as Beijing betting once again on Hong Kong’s key role for the development of the Greater Bay Area.
It would not be any other way. Hong Kong, Lee stressed, is a “superconnector” and “super value-adder”, linking mainland China with the Global North and the Global South, and still attracting all sorts of foreign investment to China.
Now compare it with the predominant view on Hong Kong in US business circles. The American Chamber of Commerce in Hong Kong is appalled, stressing how US businessmen in fact don’t understand the Safeguarding National Security directive approved last March, which complemented the National Security Law installed by Beijing in 2020.
For Beijing, these are very serious matters of national security – which range from a crackdown on money laundering to preventing the proverbial 5th columnists from launching a color revolution such as the one that nearly destroyed Hong Kong in 2019. No wonder so many American investors cannot get it. Beijing couldn’t care less.
Now let’s see what China’s top mutual fund manager has to say about it.
Zhang Kun, manager of Blue Chip Mixed Fund, runs four funds with combined assets of $8.9 billion. He prefers to set his sights on Beijing’s aim to boost per capita GDP to match the West by 2035.
If that happens, with or without a US trade war – and the Chinese won’t stop at nothing to achieve it – then per capita GDP could be around $ 30,000 (it was $12,300 last year, according to Chinese think tanks).
So foreign investment will continue to be welcomed in China, via Hong Kong or not. But on each and every front, what trumps everything is national security. Call it a practical exercise in sovereignty.
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Some russian thoughts on the Plenum and Relevant Actions:
Where will China go
Center for Geopolitical Forecasts
https://geofor.ru/
Today 10: 23 0 667
Third plenum of the CPC Central Committee held in Beijing
This event was eagerly awaited not only in China. First of all, because along with the party congresses, the third plenums of each convocation are the most important events in the life of the country, and they are usually devoted to the economy, and not just the economy. They determine medium-term plans, and sometimes a development strategy. This was the case at the historic third plenum in 1978, when the program of transformation was adopted. Deng Xiaoping abruptly changed his policy, setting the country on the path of” reform and opening up”, which eventually led China to world leadership.
Interest in the event was also fueled by the fact that the third plenum was supposed to be held at the end of last year, but it was held only now. There were a lot of expectations and gossip about this. We have begun to talk about the fact that the decisions of the plenum are carefully verified, will be epochal and will turn the world upside down. The Western mainstream attributed the delay in holding a key party event either to problems in the economy, or to alleged disagreements in the Chinese leadership, and so on. They wrote and talked about the slowdown of the Chinese economy, the large debts of local governments and the” collapse ” in the real estate and construction sectors, high youth unemployment and the like.
True, there were also attempts to observe objectivity. “In the 1970s and 1980s, after the start of reform and opening-up policies, China’s economic growth rate is second to none. For example, per capita output has increased by about 3,000% in recent decades, leading many analysts to describe China’s economic growth as a “miracle,” according to a report on the World Economic Forum website. Relatively objective journalists have written that China has become the world’s first economy in terms of purchasing power parity, and that it produces a third of the world’s industrial output and supports world trade.
On July 15, the opening day of the plenum, economic data for the first half of 2024 were published, and it turned out that the planned GDP growth rate of the PRC is maintained at 5 percent. But in the West, they also curled their lips about this figure, it’s not enough for them-they say, look, China is really slowing down. Although, for example, for Europe, such dynamics would be manna from heaven. And the Chinese themselves have not bothered about the growth rate for a long time, since in 2018 they switched to a strategy of so-called qualitative development, that is, not at the expense of traditional industries, but on the basis of high technologies and the creation of new areas, such as the production of new energy sources and artificial intelligence.
When the plenum was already underway, the Russian information space received a fake message, which was distributed on Western social networks, about the alleged health problems of the General secretary of the CPC Central Committee, Xi Jinping. Its source, as it turned out later, was the same blogger associated with the anti-Chinese Falun Gong movement, also living in the United States, who a couple of years ago “staged” a military coup in Beijing with the introduction of troops there and the arrest of Xi Jinping. It is noteworthy that its previous stuffing was on the eve of the XX Congress of the CPC. Nevertheless, even the seemingly respectable publication The Economist bought into this duck, which wrote that the general secretary of the CPC Central Committee had a stroke right during the third plenum of the CPC Central Committee.
The spread of this gossip was also facilitated by the fact that traditionally the third plenums are held without a press, there is practically no information about its progress, and there is no official information at all.
However, to date, we already have a video from the plenum, where Xi Jinping in good health speaks to the assembled leadership of the CCP to the number of more than 370 people. After all, it was he who made the main report and under his chairmanship this party forum was held, decisions were made and the final communique was approved.
From this document, we can draw a preliminary conclusion that no revolutionary turns have taken place in the life of China. All previously outlined strategies will generally be implemented. This applies to the deepening of reforms, openness, high-quality development, and the development of high-tech industries.
As planned, a “high-level socialist market economy” will be fully built by 2035, and a “modernized socialist power” will be built by 2049, the 100th anniversary of the republic’s formation. I would like to draw your attention to the word “socialist”. For some reason, we forget that China is a socialist country (albeit with Chinese characteristics), they write that socialism in China is a fiction. However, this is far from the case. After all, the Chinese Communist Party rules with its own charter and program. And the construction of a “modernized socialist power” implies, as some experts believe, a gradual rejection of the elements of the market that are widespread in today’s China.
But even now, we can say that capitalism in China works as long as it does not come into conflict with the interests of the country and the people. And large private corporations are under the strategic control of the government and the CCP. Although the communique of the plenum does not contain some wording that would imply restrictions on private capital on the path to” universal prosperity, ” this does not mean abandoning the ideals of socialism with Chinese characteristics.
But what China will definitely not give up is free communication with the outside world. “Openness is a prominent feature of Chinese modernization. It is necessary to consistently adhere to the policy of openness to the outside world, continue to encourage reforms by expanding openness, and create a new economic system with a higher level of openness,” the plenum’s communique says.
The construction of “Beautiful China” and “Peaceful China” (that is, safe for its citizens, although now crime against the person is at a minimum level) will also continue, and by 2027, the 100th anniversary of the formation of the People’s Liberation Army of China, a modernized army will be created.
As for foreign policy, it is marked in a lapidary way. It is said that Chinese modernization is on the path of peaceful development. “It is necessary to adhere to an independent and independent peaceful foreign policy” – a direct quote from the communique.
The last sentence of the communique describes how the plenum was held and what will happen next: “The Plenum called on all party comrades, the army and the multinational people of the country to rally more closely around the CPC Central Committee, whose core is Comrade Xi Jinping, to carry high the banner of reform and openness, to consolidate all forces and tirelessly strive forward, to fight hard for implementation The goal of fully building a modernized socialist power by the centenary of the People’s Republic of China and fully advancing the cause of the great rebirth of the Chinese nation through Chinese modernization!”
It was not without specific personnel decisions. As stated in the communique of the plenum, a decision was made “to grant the request of Chinese Foreign Minister Qin Gang to resign and release him from the post of a member of the CPC Central Committee.” Judging by this wording, the minister who disappeared suddenly last year and was even “buried” by the Politico newspaper is alive, but suspended. The reason is not given, however, according to rumors, this is due to an extramarital affair, which is not welcome in China, especially among senior officials.
The fate of the former Chinese Defense Minister has also been decided. Most likely, he and his colleagues will be subjected to criminal prosecution. “The plenum reviewed and adopted the report of the CPC Central Military Commission on the investigation of serious violations of discipline and law by Li Shangfu, Li Yuchao, and Sun Jinming, and approved the earlier decision of the Politburo of the CPC Central Committee to revoke Li Shangfu, Li Yuchao, and Sun Jinming from membership in the CPC.” This does not bode well for the listed comrades.
At the press conference following the plenum, it was also announced that the “Decision of the CPC Central Committee on further comprehensive deepening of reforms to promote Chinese modernization”was adopted. It consists of 15 parts and 60 articles divided into three main sections. The “Solution” offers a total of more than 300 important reform measures. We’ll find out which ones later. Unlike the plenum’s communique, this document has not yet been published. But even the released communique is quite difficult for non-specialists to understand, since it” ciphers ” the details of economic and political steps in the style typical of Chinese party documents.
Some Russian observers and politicians have been quick to conclude that China has allegedly decided to further break with the Western world and that Xi Jinping is “preparing the country for an open confrontation with the West.” This is precisely what China does not want and avoids in every possible way. Much will depend on the intentions of the other side.
However, the actual results of the plenum will be finally understood a little later, perhaps already in terms of specific changes that will take place.
Author: Mikhail Morozov
Thank you Larch! and so very good to see you. One comment based on this sentence from the report: “Some Russian observers and politicians have been quick to conclude that China has allegedly decided to further break with the Western world and that Xi Jinping is “preparing the country for… Read more »
Well said. I think like Iran, the Chinese are too subtle for most to understand. Maintaining “strategic ambiguity” is an affectation, a useful cloak. To disarm the hasty, fearful, overstretched, pained enemies. They must be shown a mirage of hope and possibility of continued hegemony, even as they bleed out… Read more »