China Announces Key Reform Meeting, Emphasizing Party Leadership

(Bloomberg) -- Chinese President Xi Jinping will convene senior officials from July 15 to 18 for a delayed conclave that’s expected to set long-term policy on a wide range of economic and political issues.

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The 24-member Politburo announced the dates for the third gathering of the Communist Party’s Central Committee during Xi’s current term after wrapping a meeting on Thursday, according to the official Xinhua News Agency.

The Chinese leader presided over the meeting that discussed a “resolution on comprehensively deepening reform and advancing Chinese modernization,” which aims to build the nation into a “high-level socialist market economy” by 2035, the agency reported. It’ll be submitted for endorsement by the party’s elites at the upcoming session.

The event — known as the third plenum — is one of the most important in China’s political calendar, often setting the course for economic policy in the long term. It brings together about 400 state leaders, ministers, military chiefs, provincial bosses and top academics at a military hotel in Beijing, usually for about a week.

The Politburo meeting emphasized the party’s leadership should be at the center of any reform, and called for the proper handling of relationships between economy and society, government and market, development and security, according to Xinhua.

This gathering comes as China’s senior policymakers struggle to arrest a deepening property crisis that is rippling through the economy, and grapple with a growing international backlash to its surge of cheap exports that have prompted a tidal wave of tariffs.

The agenda echoes Xi’s earlier calls for “further deepening reform” in remarks published in May by party journal Qiushi, or Seeking Truth, in a stage-setting editorial ahead of the plenum. State media has also published a series of sweeping profiles trumpeting the top leader’s reform credentials in the run up to the high-profile event.

“Decisions to be made at the third plenum will play a critical role in resolving the current problems we face and framing the development targets of the Chinese society in the future,” Peng Sen, president of the China Society of Economic Reform and an ex-vice chairman of the National Reform and Development Commission, said at the World Economic Forum in Dalian on Thursday before the Politburo announcement.

The country should “firmly press ahead” with market-oriented reforms, he said, calling for more favorable policies to be given to support innovative private companies. Land, capital, labor, technology and data should be allocated and priced by market forces as a unified national market is being built, to “inject life” into the Chinese economy, he added.

Investors will scrutinize the meeting’s readout for signs of Xi’s long-term roadmap for China’s slowing economy among the party speak. The top leader is likely to prioritize developing “new productive forces,” a slogan referring to high-tech growth drivers — according to hints in recent articles in state media outlets.

China may also be considering a reform of consumption taxes, including broadening the tax base and increasing rates, Goldman economists said note this month, citing a report by the Securities Times.

The ruling party usually holds its third plenum one year after setting its new leadership team, according to a Bloomberg analysis of meeting readouts. Delaying this gathering to 2024 marked the first time the meeting has been held in an off-schedule year in over three decades. Xi’s last reshuffle came in 2022.

Removals and appointments to the Central Committee are expected during the conclave after the surprise ousting of China’s defense and foreign ministers last year. A third minister — for agriculture — is set to be removed after a corruption probe was launched against him in May. All of the three sit on the 205-member committee.

A sweeping anti-corruption purge in the military means there could be more changes to the committee’s over 40 seats that are currently held by People’s Liberation Army members.

--With assistance from Fran Wang and Lucille Liu.

(Updates with more details about the plenum and comments from government adviser)

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