[Beijing Diary] 'Certain and Concrete' China

"While safeguarding China's basic economic system, efforts must be made to build a high-level socialist market economic system," "Ideological concepts and institutional defects that hinder the progress of Chinese-style modernization must be resolutely eliminated."

These remarks were made by Chinese President Xi Jinping during a visit to the eastern Shandong Province on the 23rd, where he met with businesspeople. The gathering reportedly included representatives from China's state-owned enterprises, Hong Kong private companies, and overseas firms. The fact that President Xi, who usually avoids direct meetings with businesspeople, took the initiative to hold such an event, and that it occurred ahead of the 3rd Plenary Session of the 20th Central Committee of the Chinese Communist Party (the 3rd Plenum), where China's economic policy direction is set, drew considerable attention. The Hong Kong South China Morning Post (SCMP) described the remarks as "the most pro-business message delivered by China's top leadership ahead of the 3rd Plenum."

[Image source=EPA Yonhap News]

However, for those unfamiliar with China's rhetoric, it might be difficult to agree with the assessment that President Xi's remarks are pro-business. The term "socialist market economic system" itself is paradoxical, and the concept of "Chinese-style modernization" is not clearly defined. From the perspective of businesses that operate based on concrete numbers and policies, they can only guess the speaker's intentions and future plans.

At a recent gathering, a China expert was asked whether they could explain what "socialism with Chinese characteristics" and "Chinese-style modernization" mean. While everyone likely had their own answers, no one was able to confidently provide a clear explanation. The meeting included many experts who have studied China for several years to over a decade. Afterwards, opinions were exchanged that the ultimate goals and aims of China are often assumed too abstractly, leaving wide room for interpretation, which in turn creates uncertainty and anxiety.

As previously mentioned, China is scheduled to hold the 3rd Plenum in July. The 3rd Plenum, one of seven plenary sessions held between the five-year National Congresses of the Communist Party, has historically presented major economic policy directions. This year's session is scheduled more than half a year later than usual, indicating the leadership's deep concerns over solutions to the economic downturn.

Even from the information already revealed, China's economic situation is challenging. In April, new yuan loans amounted to only 730 billion yuan (approximately 137.8 trillion KRW), falling far short of market expectations (1.2 trillion yuan). Housing prices in the same month dropped 3.1% year-on-year, and fixed asset investment increased by only 4.2%, below the forecast of 4.6%. Foreign direct investment decreased by 27.90% year-on-year from January to April this year.

China now needs to present clear and concrete policies. This applies not only to domestic private economic actors but also to overseas companies and investors. They do not have time to interpret vague rhetoric full of ambiguity. After July, it is hoped that someone asking about China's major national governance directions and policies will be able to receive clear explanations.