The prolonged delay in convening China’s 20th Third Plenum, a key economic session has sparked speculation in the market and various sectors. In our interactions with clients, including Chinese and foreign enterprises, as well as local government officials, a recurring question has been raised: Why has the Third Plenum not been convened yet? If convened, what major issues might be addressed? From our observations, the genuine concern of various sectors of Chinese society about this session exceeds that of the previous ones. This not only reflects the micro-level entities in the Chinese market showing a keen interest in national policies but also indicates the broader societal concerns about the future development direction of the country.
The 11th Third Plenum, held from December 18 to 22, 1978, marked a historic shift in China by signaling reform and opening up and shifting from isolation to openness to the outside world.
This essentially embedded the reform as the legacy of the Third Plenum. Now, 45 years later, amidst significant changes in the international political and economic landscape and challenges to China's economic development, it would be fitting to discuss the expectations of the market and Chinese society in the session.
As a third-party think tank with a long-term focus on national affairs, researchers at ANBOUND believe that the challenges facing China's current development are not merely technical policy issues but more fundamentally rooted in underlying problems. If the upcoming Third Plenum fails to identify and address these fundamental issues by making breakthroughs in their resolution and responding to widespread societal concerns, it could potentially impact China's development over the next five to ten years.
Based on the market’s perspective, we believe the following aspects may need to be considered:
Firstly, it is crucial to continue the process of reform and opening-up. Since initiating this process in 1978, China has sustained it for 45 years. Looking ahead, the most significant historical mission for China, from top to bottom, from officials to citizens, from the government to the market, is to prevent any interruption in China's development process. The primary responsibility of contemporary individuals is not to artificially create an entirely different developmental path from the past but to maintain the continuity of the country's long-term stable development.
Secondly, maintaining the momentum and confidence of reform and opening-up is of utmost importance for China. In recent years, the confidence in reform and development among various sectors in the country has gradually diminished. This is not only reflected in economic development but also in various aspects such as social development and institutional reform. Additionally, the alignment of economic and market reforms with reforms in other areas of the system will become a prominent issue in the future. All in all, the reform requires to be done in multiple sectors, and the mere reform of the economic sector is insufficient to support China's comprehensive development in the future.
Thirdly, addressing the ongoing challenge of meeting the progressively evolving needs of the populace remains a fundamental issue for China in the long term. Undoubtedly, the pursuit of high-quality development constitutes China's enduring direction. However, existing regional disparities, urban-rural gaps, and wealth disparities in China's current development are still considerable. Therefore, development policies should emphasize continuity and systematic approaches. In the past, when China was economically impoverished, the principal contradiction was economic development. The overarching theme shifted from class struggle to economic construction, from poverty and backwardness to socialist modernization. This historical trajectory underscores the importance of continuous and systematic development policies. Today, China's primary contradiction remains developmental, with a focus on development first, followed by sustained development, and subsequently, the pursuit of high-quality development. China must rely on continuous development to smoothly navigate the middle-income trap and ultimately advance into the ranks of developed nations.
Fourthly, there must be a shift toward the rule of law, relying on legal frameworks to construct the foundational structure for the China's social development. It is crucial to implement legal governance and avoid excessive reliance on administrative power and control. In reality, the more comprehensive the rule of law, the greater the potential for increased freedom in the economic and social development of the country, enhancing the vitality of national development.
Fifthly, it is crucial to thoroughly address the fluctuations in the development of the private economy and China’s socialist market economy. In practical implementation of this, however, there have been varying degrees of fluctuations, and the practices of administrative and controlled economies have periodically strengthened, causing considerable confusion in the market. We believe that on political platforms like the Third Plenum, it is necessary to reemphasize the development strategies established by the country to boost the confidence of the market and various sectors.
Lastly, it is essential for China to build its relations with the world based on openness and cooperation. Currently, the world is deeply entangled in the vortex of intensified deglobalization and geopolitical maneuvering. Chinese leaders have repeatedly emphasized globalization and the shared destiny of humanity, showcasing China's position amid global turbulence. In this new era and context, how China navigates its relationship with a changing world and convinces the world of its openness becomes a fundamental challenge for the future.
Final analysis conclusion:
While China’s 20th Third Plenum has yet to be convened, it is reasonable to assume that the country’s relevant departments are likely already engaged in research and preparations for the upcoming meeting. China has effectively navigated the 45-year process of reform and opening-up, and is likely to continue on this path.
