The Third Plenum and US-China relations
The Third Plenum occurs every five years and sets the tone for economic policy for the future. This year’s Third Plenum has been quite dull, with the leadership issuing a policy document that was a grab bag of Xi Jinping’s main talking points. It was also almost over-shadowed by continuing rumors of a stroke by Xi, which could not be verified. Meanwhile, a viral meme has been circulating within China referring to the “Garbage Time of History.” People are not happy.
Despite the drama, and the talk of reform, Beijing is constrained by a difficult economic and geopolitical environment. This means Beijing is constrained in its policy actions. The environmental factors include the loss of the property market as a driver of growth, the difficulty of restructuring China’s inefficient tax system to resolve the local fiscal deficits, and demographic and other structural issues that will restrict future growth. In those areas where the central government has the power to change policy tactics it is unwilling to do so. These include the external problems caused by China’s "wolf warrior" diplomacy, the inefficiency of capital investment in semiconductors and other technology, and the lack of any meaningful measures that would support rebalancing the economy toward consumption.
Given this environment, what does the Third Plenum really mean? What is China’s likely trajectory?
Now read on...
Register to sample a report