China looks inward for technology, investment and know-how
Its third plenum heralds major policy shift
CHINA’S delayed 2024 third plenum yielded a communique long on intentions and commitments but short on specifics. It listed “modernisation of the tax system” without explicitly offering a fair fiscal balance between central and local authorities to solve the indebtedness of local governments. It offers no new policy proposals but, nevertheless, a new direction under Xi Jinping’s leadership is taking shape, one that is possibly as decisive as previous plenums.
The first third-plenum under the leadership of Deng Xiaoping in 1978 marked a departure from Chairman Mao Zedong’s inward-looking development based on self-reliance. It opened China to the world economy, inviting technology, know-how and investment. This resulted in China lifting hundreds of millions out of poverty over the last 40 years and becoming the second-biggest economy in the world.
The 2013 third plenum was another important development and the first overseen by Xi. Markets were given a “decisive role”, producing great expectations in Western observers. This was boosted by Xi’s commitment to globalisation in 2017 at the World Economic Forum in Davos, contrasting the protectionist stance of US president Donald Trump.
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