The six top lines from China’s ‘Third Plenum’

It’s been a summit-packed week. Between America’s GOP program in Milwaukee, the Brits cosying up to Europe at Blenheim Palace, and Japan hosting 18 Pacific Islands in Tokyo, China’s own Third Plenum almost took a backseat. Almost.

These closed-door plenums, chaired each year by President Xi, are the Super Bowl for anyone keen to figure out what China’s Communist Party leaders have in store.

And after months of unexplained delays, grim economic updates, and high-profile purges, anticipation was riding higher than 1980s jeans.

That’s because some prior plenums have made big headlines, like:

• The 1978 gathering that opened China up to foreign business, and
• The 1993 confab that semi-liberalised the yuan.

This latest one finally kicked off on Monday and wrapped with a communique yesterday (Thursday) – the Party will release a more detailed ‘decision’ in coming days but, for now, this text is characteristically lofty and tantalisingly vague.

So here are the plenum communique’s six most intriguing lines:

1. “We must remain firmly committed to accomplishing the goals”

In other words, Xi is sticking with his 5% growth target, notwithstanding the headwinds. It’s unclear how he’ll hit it: the text’s emphasis on “quality” growth offers little hope for those wanting quantity (stimulus), though officials may eventually feel pressure to hit the accelerator to avoid a missed target.

2. “Ensuring and enhancing the people’s wellbeing… is one of the major tasks of Chinese modernisation”

This section goes on to hint at more support for families and the elderly, which could nudge household consumption up. There are also clues that Xi could loosen China’s ‘hukou’ restrictions on rural households moving to cities, bringing more demand for an ailing real estate sector. But these hints seem modest.

3. “We must better leverage the role of the market”

This is really Xi saying he wants to better use the market for state aims, rather than unshackle the market from the state. And the text makes clear his aims still revolve around security, including reducing China’s dependence on Western tech.

4. “We must make concerted efforts to cut carbon emissions”

This is part of a broader low-carbon paragraph with poetic references to “lucid waters and lush mountains”. The key thing to note here is it’s probably China’s biggest – and most direct – plenum reference to carbon emissions yet.

5. “In the face of a grave and complex international environment and the arduous tasks of advancing reform“

The thing about this dash of context is that most of us would nod along. While framed carefully to avoid blame, it still reflects an appreciation of China’s reality – and that’s interesting because Western officials often ponder the extent to which China’s officials are game to feed that reality up to the party leaders.

6. “Comrade Qin Gang’s resignation should be accepted”

Remember Mr Qin? He was the foreign minister mysteriously fired last year after just 206 days in the job (that’s 19 Scaramuccis for those playing at home). The fact he’s still mentioned as a “comrade” suggests his sin wasn’t too spicy (the rumour remains that he had an affair and fathered a child with a news anchor).

But Qin was just one of several senior officials booted over the past year, along with the defence, finance, science and agriculture ministers, hence this plenum’s exhortation to “faithfully” follow the party’s decisions.

And for a man with a massive reform to-do list, plus an ambitious deadline (the text says 2029), Xi doesn’t seem to have much faith in his team.

INTRIGUE’S TAKE

So in the big picture, this plenum offered little that’s new. But for an opaque system like China’s, a lack of new information can itself be new information. That’s partly why many China-linked stocks dipped once the plenum closed.

Specifically, by offering little new detail, this plenum has sent another signal that President Xi is doubling down on his same vision for a more state-led, more tech-sovereign, and more security-focused China.

And for now, that signal is giving investors little reason to keep investing.

Also worth noting:

• Some China-watchers were looking for signs President Xi is okay. Why? Social media was abuzz with unfounded rumours he’d had a stroke, but footage showed him handling his duties normally.
• The plenum’s more detailed ‘decision’ is due out in the coming days. Thereafter, the communist party’s Politburo meets later this month, and may (or may not) offer more insights into Xi’s thinking.