The recently concluded Third Plenum outlined a series of measures to address the structural flaws that underpin the ongoing weakness in private consumption, such as strengthening the social safety net, improving income distribution, developing a new real estate development model, and increasing the fiscal capacity of local governments to enable them to play a more significant role in improving people's livelihoods. Details on implementation are still forthcoming, with the task-specific Politburo meeting this month expected to provide more information on this.
In the meantime, the top priority remains strengthening the resilience of the Chinese economic and governance systems against domestic and external volatility. This explains the emphasis the Third Plenum placed on achieving technological self-reliance by fostering the development of 'new productive forces.' This includes improving the country’s indigenous innovation capabilities in core and emerging technologies, by securing key industrial chains in industries such as integrated circuits, medical devices and advanced materials, and by strengthening state-owned enterprises (SOEs), which according to the Third Plenum’s Resolution are to be “steered toward major industries and key fields that are vital to national security and serve as the lifeblood of the national economy.”
It is also worth noting that the CPC has set a 2029 deadline to accomplish the reforms outlined at the Third Plenum. This is a very ambitious target, especially given the complexity of the structural imbalances China is facing.
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