As the 20th Central Committee's Third Plenary Session of the Chinese Communist Party, where the direction of China's economic policy will be presented, approaches, scholars have raised calls to reinvigorate 'innovation,' a core agenda item from 2013. Given the spread of economic stagnation due to incomplete pro-market policies, it is said that without large-scale reforms, significant changes are difficult to expect.
On the 28th, Hong Kong's South China Morning Post (SCMP) reported experts' criticism that the agenda of "deepening comprehensive reforms" presented at the 18th Central Committee's Third Plenary Session in 2018 during Xi Jinping's first term (2012?2017) has not been fully implemented. Among the plenary sessions held seven times between the five-year National Party Congresses, the third plenary session, or '3중전회,' reveals China's major medium- to long-term policy directions.
According to SCMP, Wu Jinglian, regarded as the godfather of China's market economy, stated in an academic journal, "It is time to reflect on the practical implementation of the hundreds of tasks proposed at the 2013 plenary session," and pointed out, "We must identify the unfinished tasks, investigate the root causes, and earnestly complete them." Wu Jinglian played a key role in establishing China's reform path since the Deng Xiaoping era and has long advocated the importance of a market economy. He argued, "It is urgent for China to re-execute the reforms proposed in 2013," emphasizing the need to "build an open and economic market."
SCMP explained, "China's Gross Domestic Product (GDP) grew 125% from 56 trillion yuan in 2013 to 126 trillion yuan in 2023, and rapid technological development has significantly expanded its role in the global supply chain," but added, "Many scholars recently question the sustainability of reforms, noting that GDP growth has considerably slowed, and considering rapid aging, rising debt, and external headwinds, the outlook is bleak."
In particular, citing scholars, it pointed out, "The real estate sector and private investment, which have been growth engines for decades, are experiencing a downturn, and foreign investors are moving production facilities overseas or pursuing nearshoring (returning production to the home country). The current stagnation is partly due to China's incomplete pro-market reforms."
Camille Blennoa, Deputy Head of the China Project Team at the U.S. consulting firm Rhodium Group, stated, "Innovation has not progressed as described in the 2013 agenda and lags far behind leading market economies," and criticized that the state-owned enterprise restructuring announced by China in 2015 has also not been properly implemented. In fact, the proportion of state-owned enterprises among China's top 100 listed companies by total market capitalization increased from 31.2% in 2021 to 50% in 2023. The growth of state-owned enterprises was particularly prominent in the financial and technology sectors. Blennoa added, "The move is not to reduce state control but to strengthen it, a trend that has become more widespread and influential since the pandemic."
David Zweig, Professor Emeritus of Political Science at Hong Kong University of Science and Technology, explained, "After the spread of COVID-19, many of China's plans were overturned, reforms fell into confusion, and China's external environment became more complex, leading China to prioritize other strategies such as 'Made in China 2025' to catch up technologically," adding, "This has resulted in stronger state intervention."
Meanwhile, according to the state-run Xinhua News Agency, the Central Political Bureau of the Chinese Communist Party held a meeting yesterday chaired by General Secretary (President) Xi Jinping and decided to convene the 20th Central Committee's Third Plenary Session from July 15 to 18 in Beijing. Xinhua reported that at the meeting, the Central Political Bureau "studied the issues of further deepening comprehensive reforms and Chinese-style modernization."
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