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Chinese leaders vow to fight 'risks' plaguing economy
Third Plenum promises to "give fuller play to the role of market mechanisms"
Security guards outside the Jingxi Hotel, where China’s leaders were conducting the Third Plenum in Beijing on July 15, 2024. — AFP
Beijing's leaders vowed on Thursday to resolve "risks" plaguing China's economy, but were yet to offer any concrete steps to pull the country out of its financial woes.
The world's second-largest economy is grappling with a property debt crisis, weakening consumption, and an ageing population.
All eyes were on how this week's Third Plenum meeting of the Communist Party in Beijing, attended by President Xi Jinping, might tackle that deepening economic malaise.
But few new policies were announced as the meeting wrapped up on Thursday.
State news agency Xinhua said they had agreed to "prevent and resolve risks in key areas such as real estate, (and) local government debt".
They also vowed to "actively expand domestic demand", state media reported, after data this week showed retail sales — a key gauge of consumption — rose just two per cent in June.
Gary Ng, a senior economist at Natixis, said the readout offered "nothing out of expectation as it just confirms existing policies".
But Hoo Tiang Boon at Nanyang Technological University in Singapore told AFP the statement "acknowledges certain risks and obstacles to the Chinese economy".
"It's a sign that Beijing recognises the problems, but I'm not sure if they know what are the effective measures to address them," he said.
The Third Plenum has for decades been an occasion for the party's top leadership to unveil major economic policy shifts.
In 1978, then-leader Deng Xiaoping used the meeting to announce market reforms that would put China on the path to dazzling economic growth by opening it to the world.
And more recently following the closed-door meeting in 2013, the leadership pledged to give the free market a "decisive" role in resource allocation, as well as other sweeping changes to economic and social policy.
Echoing past plena, top officials promised on Thursday to "give fuller play to the role of market mechanisms".
But they also said they would "make up for market failures" and "smooth the circulation of the national economy".
Lynn Song, ING's chief economist for Greater China, said the readout offered some "positive signals".
But, he said, the meeting was "not a platform for pushing specific new stimulus measures".
"Those who were looking for new signals on the property market will likely be disappointed," Song said.
"While real estate was mentioned as one of the three key risks China prioritises resolving, there was no further mention of expanding affordable housing nor further specifics on efforts to stabilise the property market," he pointed out.
The meeting comes just days after China posted official statistics showing the economy grew by just 4.7 per cent in the second quarter of the year.
It represented the slowest rate of expansion since early 2023, when China was emerging from a crippling zero-Covid policy that strangled growth.
Analysts polled by Bloomberg had expected 5.1 per cent.
Beijing has said it is aiming for five per cent growth this year, enviable for many Western countries but a far cry from the double-digit expansion that for years drove the Chinese economy.
The economic uncertainty is also fuelling a vicious cycle that has kept consumption stubbornly low.
Among the most urgent issues facing the economy is the beleaguered property sector, which long served as a key engine for growth but is now mired in debt, with several top firms facing liquidation.
With the country facing those headwinds, this week's meeting resolved to "strengthen guidance of public opinion and effectively prevent and resolve ideological risks", according to state media.
Officials also formally removed ex-foreign minister Qin Gang from the ruling Communist Party's highest decision-making body, and "confirmed" the party's move to expel former defence minister Li Shangfu.
Both officials disappeared from the public eye last year after just a few months on the job.
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