Analysis: ‘Decisive role’ to ‘better leverage’ - China’s third plenum outcomes suggest diminished role of market

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A reform-focused meeting of China’s Communist Party Central Committee yielded a communique long on commitments but short on specifics. Indications of Beijing’s economic priorities can already be seen even as a clearer picture is yet to emerge, say analysts.

A police officer walks past red flags, on the day of the opening session of the Chinese People's Political Consultative Conference , at Tiananmen Square, in Beijing, China March 4, 2024. SINGAPORE: China has hinted at a potentially diminished role of the market in driving its economy, analysts say, as they point to clues being offered in the reported outcomes of an economic reform-centred meeting held this week by the upper echelons of China's Communist Party .

The document states that it is necessary to “better leverage” the role of the market, foster a fairer and more dynamic market environment, and make resource allocation as efficient and productive as possible.This is a departure from the free market being granted a “decisive role” in resource allocation as stated in the 2013 third plenum, the first overseen by President Xi Jinping, observers point out.

Dr Frank Tsai, founder and CEO of China Crossroads, said: “The party has seemingly given up on its feint towards the private sector from 2013 and acknowledged the reality … that the party was not willing to, and cannot and should not allow the market to play a decisive role.” “Officials made positive noises about promoting markets and encouraging businesses, but the proof will be in the pudding of the plenum decision, and even more so in whether firms actually see a change in their operating environment in China,” Mr Thomas added.

In this plenum, the central committee adopted a resolution on “further deepening reform comprehensively to advance Chinese modernisation”, as stated in the communique. During the Friday press conference, Chinese officials called this “the most important outcome” to advance Chinese modernisation.

China has been facing tightening restrictions on access to Western advanced technology, such as computer chips and artificial intelligence, as it tussles with the US in a rivalry marked by American claims ofPersonnel changes were also confirmed by the Central Committee as laid out in the communique, with the wording used for one particular individual drawing particular attention.

Pointing this out, Mr Neil Thomas, a fellow on Chinese politics at the Asia Society Policy Institute, told CNA the recent corruption scandals “appear to have eroded the political power of the military”. “Xi's ability to advance his policy agendas, punish the military, and protect Qin Gang suggests that he remains in firm control of the Communist Party,” said Mr Thomas.The communique set a deadline of sorts for the reform tasks outlined in the resolution - stating that they “shall be completed by the time the People's Republic of China celebrates its 80th anniversary in 2029”.

Dr Wang Huiyao, founder and president of the Center for China and Globalization , believes urbanisation will be the “biggest driver of the future Chinese economy”. To this end, he told CNA that easing urban housing policies on the country’s vast migrant worker population will likely be pivotal. Mention was made in the communique of improving urban-rural integration and development, along with deepening land reform as longer-term strategic directions. Still, details were scant, as was the case for the other topics.

 

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