Hundreds of senior Chinese Communist Party (CCP) officials are holding their third plenary session in secret in Beijing, aiming to draw up a plan to get the country’s economy back on track.
Much of the world’s media attention this week is focused on the 2024 Republican National Convention (RNC) in Milwaukee, where former President Donald Trump and members of his party are appealing to voters ahead of the November election.
But on the other side of the globe, in Beijing, there is another gathering of party leaders that could shape the global economy for years to come. While the Republican National Convention is likely to be a glitzy event broadcast around the world, the Beijing meeting will be held in secrecy, with observers only able to speculate about what will happen there.
Chinese leader Xi Jinping and around 370 senior officials of the Chinese Communist Party (CCP) Third Plenary Session of the Central CommitteeThe event itself is being held behind closed doors, as reported by The New York Times, where they are expected to draw up a strategy for economic growth for the country. Not entirely clear As for which hotel the leaders will meet, Chinese state media has said it will be an opportunity for President Xi Jinping to unveil his national economic plans.
But there are signs that Xi Jinping and his Communist Party allies are struggling to shape economic policy. First, the Third Plenary Session is usually held every five years to give the government a chance to shape economic policy. Announce economic policy plans and reformsBut the bill has been delayed for months, perhaps indicating that China’s leaders may not be sure exactly what kind of economic policy they want to implement.
There are a lot of issues to address, which are causing great anxiety in China, which is in the midst of a real estate slump. cascading effects Overall economyGrowth is slow and local government debt is high. Weak consumer demand.
CNN Overview Stakes:
Economic problems following years of strict pandemic countermeasures have sparked growing social discontent and questions about the direction of the country under President Xi Jinping, China’s most powerful leader in decades.
These questions have been underscored by recent personnel changes in the upper echelons of Xi’s administration, which have seen the appointment of three ministers and a handful of senior officials. top military officer Some have been removed from their posts or under investigation, a situation that some observers of China’s opaque political system believe has led to the postponement of the General Assembly.
Xi Jinping and his top officials National economic challenges This will have a major impact on whether China can continue to improve its quality of life and public trust.
Victor Shi, an expert on Chinese politics at the University of California, San Diego, said: Said According to Politico, there are growing calls within China for a “change in economic policy direction”, but any wholesale changes are unlikely and President Xi Jinping has limited ammunition at his disposal.
Xi Jinping’s policy options include cutting government spending to curtail Beijing’s military expansion efforts and support for state-run industries, or raising corporate and personal income taxes. “But if we tax companies more, will they still want to stay in China? If we tax personal income more, the wealthy will go to China,” he said. People who have already left China “They will leave in droves,” Shi added.
The other scenario is one that the Chinese Communist Party and the Chinese government often resort to when they face an economic crisis: Produce a lot of stuff, Export overseasAs The New York Times reported, there are signs that it could happen again. explanation:
Local governments and central ministries have adopted President Xi Jinping’s latest economic slogan, “New high-quality production capacityTo achieve more sustainable growth.
In practice, that means building more factories. China already produces nearly a third of the world’s industrial goods, but it’s pushing for more. Plans include introducing more robots and other automation to make up for a shortage of willing factory workers.
The solar panel, electric vehicle and battery industries, which the government has recently favoured, are replacing older industries more closely tied to the real estate sector, such as steel and cement manufacturing.
This is a problem for the United States. China has already There is massive over-industrialization in these sectors.China produces products in quantities far in excess of what is needed for its own domestic use. It exports these products to foreign markets, including the United States, selling them at prices far below fair market value. The objective is not to actually make a profit, but to establish a global monopoly, to support domestic industries, and to control major global industries, thereby strengthening its geopolitical strength.
American industries such as paper and glass were devastated by Chinese excess capacity, while heavy industries such as steel barely held on. Emerging American industries such as electric cars and solar panels are unlikely to survive unless China’s excess capacity is curbed. We’ve been warning you for months. Allowing Chinese cars into the U.S. market would lead to an “extinction level event” for the U.S. auto industry.
If China’s Communist leaders once again turn to Chinese manufacturing to reverse China’s current economic downturn, the United States cannot afford to sit back and do nothing. American manufacturers and factory workers should not have to bear the costs of rebuilding a foreign economy.
But U.S. leaders appear to be paying attention. Jay Shambaugh, Under Secretary of the Treasury for International Affairs, said: A well-timed speech Last week he criticised China’s excess capacity, noting that “Chinese policymakers’ clear desire now is to further promote manufacturing as an engine of Chinese growth, which will mean a bigger and bigger share of global production, and that other countries’ manufacturing sectors will have to shrink to compensate.”
The Biden administration has taken steps to mitigate the damage from Chinese excess capacity, Shambaugh said, pointing to higher tariffs on Chinese imports in sectors like electric vehicles, solar power and steel, as well as investing in domestic manufacturing through industrial policies like the CHIPS/Science Act, the Combat Inflation Act and the Bipartisan Infrastructure Act.
“We are not alone in dealing with the negative spillover effects of China’s non-market practices. “The EU and Turkey also recently imposed tariffs on Chinese-made EV imports. Mexico, Chile and Brazil have imposed trade measures against Chinese steel. India is using tariffs and other trade tools to protect its solar manufacturers from Chinese dumping,” Shambaugh said. “While each country has its own concerns and needs, the underlying reasons are undeniable: As G7 leaders and finance ministers have stated, Chinese excess capacity ‘undermines the resilience and security of our workers, industries and economies.’ The United States will act, and we will not be isolated.”
In the face of the expected global reaction, the CCP’s usual option of “build more and export more” may not be the quick fix that it has proven to be in the past. This is no doubt one of the reasons for China’s domestic economic instability, and also the reason why it has taken so long for the CCP leadership to convene its Third Plenary Session.
Either way, what is announced out of China this week will undoubtedly have ripples through global markets and have a major impact on how the U.S. deals with China going forward. We will be closely watching what is happening in Beijing and will provide updates accordingly.
