China Kicks Off Major Political Meeting Amid Gloomy Economic Data

Security guards stand outside the Jingxi Hotel, where Chinese officials are conducting the Third Plenum, a key economic meeting, in Beijing on July 15, 2024. Greg Baker/AFP via Getty Images

News Analysis

The Chinese Communist Party (CCP) began a four-day political conclave—known as the Third Plenum—on July 15 to deliberate on economic policies to turn around China’s struggling economy.

The conclave, held every five years, didn’t get off to a good start. While it was supposed to be held last summer, the meeting was delayed to this year without an official explanation. Then, on July 15, China announced that its GDP growth for the second quarter missed analyst forecasts, and its home prices dropped in June, a decrease not seen since October 2014.

The closed-door meeting was convened by the communist regime’s Central Committee, which is led by CCP leader Xi Jinping. On the final day of the plenary session, the committee is expected to announce any major social and economic policies.

Regardless of the policies the CCP might implement, experts who spoke to The Epoch Times ahead of the conclave don’t expect the Chinese economy to be out of the woods anytime soon.

“The measures that the Third Plenum are likely to put forward—some of which might appear helpful in attracting more foreign investment—may not suffice in the end,” said Wu Se-chih, a researcher at Taiwan Thinktank in Taipei.

Grim Outlook

The Third Plenum has previously been an occasion for the Party’s top officials to unveil significant policy shifts. In 1978, former CCP leader Deng Xiaoping launched a “reform and opening up” policy in the Third Plenum of the 11th Central Committee that transformed the poverty-stricken Maoist-style economy into an economic powerhouse. In 2018, the incumbent CCP chairman, Xi, consolidated his power by scrapping term limits on the country’s position of chairman at the Third Plenum of the 18th Central Committee.

However, this round, policymakers are confronted with some significant challenges.

“With weak consumption, low investment sentiment, and a record high unemployment rate, China’s economy will almost certainly not rebound,” Mr. Wu told The Epoch Times ahead of the July 15 conclave.

Factory activity has already slowed. Official data show that the manufacturing purchasing managers’ index (PMI) fell from 50.4 in April to 49.5 in both May and June, below the 50-point threshold that separates growth from contraction.

Meanwhile, the real estate sector, once China’s pillar of economic growth, continues to deteriorate, weighing on China’s sluggish economy. According to the official data, home sales in the first five months of the year plummeted 30.5 percent year over year, and developer investment fell by 10.1 percent year over year.

“China’s domestic economy is now slumping to a low that lacks the momentum to drive its growth,” said Mr. Wu.

Additionally, according to Mr. Wu, the regime prioritizes increasing security and centralizing the Party’s control, which hinders the economic recovery that is sought.

“Xi Jinping has emphasized putting security first,” said Mr. Wu. The CCP leader has been “stressing on the Party ruling over everything—economy, ideology, and political reform—which increasingly hinders China’s economic growth over the past decade.”

Job seekers attend a job fair in Beijing on March 20, 2024. Jade Gao/ AFP via Getty Images

Mr. Wu noted that Xi has established new laws and revised existing ones to strengthen the CCP’s control over national, economic, and social security.

Over the past few years, the CCP has fortified its anti-espionage and data-controlling laws. In the latest security push, the regime extended its already broad state secrets law in February, tightening control of what it deems sensitive information by introducing the concept of “work secrets.”

“These policies and laws worry foreign investors and Chinese businessmen, and we see signs of investment fleeing China,” said Mr. Wu.

China’s foreign direct investment (FDI) has fallen for the 12th consecutive month, highlighting Beijing’s struggle to attract overseas investors. Data from the Ministry of Commerce, released in June, show a 28.2 percent decline in inbound FDI for the first five months of 2024, totaling 412.51 billion yuan (about $56.8 billion), worsening from April’s 27.9 percent drop.

The closed office of the Mintz Group is seen in an office building in Beijing on March 24, 2023. Five Chinese employees at the Beijing office of U.S. due diligence firm Mintz were detained by authorities, the company said on March 24. Greg Baker/AFP via Getty Images

Amid a slowing domestic economy and diminishing foreign investment, CCP leaders have been working to restore foreign investors’ confidence in the country. State media outlet Xinhua News touted on July 15 that “strategic deployment” would be made at the four-day meeting, regarding “comprehensively deepening reform and advancing Chinese modernization.”

‘No Major Improvements’

In March, Xi met with about 20 U.S. executives and academics and urged American businesses to continue investing in China.

Despite the CCP leaders’ rhetoric, outside observers aren’t optimistic that Beijing would create a hospitable business environment for U.S. and other foreign companies.

With state secret laws and other stringent regulations in place, “the overall policies indicated that China is regressing and becoming more isolated,” Feng Chongyi, an associate professor in China studies at the University of Technology Sydney, told The Epoch Times.

Even though Chinese authorities may introduce some policies during the Third Plenum to save the economy, Mr. Feng said these measures would be “only small steps and won’t lead to significant improvements. The CCP authorities won’t loosen their control over business or the public. There will be no major improvements.”

According to Mr. Feng, China is heading toward Maoist totalitarianism, with Xi prioritizing the Party’s control over people’s prosperity; this direction is leading some Chinese citizens to “awaken” to the CCP’s absolute control over society.

American and foreign business leaders doing business with China are also beginning to realize the nature of the regime, according to Mr. Feng.

“These businessmen who only care about profit are now awakening. More and more people are waking up” to the CCP’s threats, said Mr. Feng.

Mr. Feng urged U.S. businesses to distance themselves from the CCP and implored the U.S. government to adopt a tough approach toward communist China by imposing more sanctions on Chinese officials.

“Merely making a political statement against the CCP is no longer adequate. It must be translated into tangible actions and the implementation of sanctions,” he said.

“Do not engage in business with the communist regime; do not roll out the red carpet for it.”

Luo Ya contributed to this report.