After several months of delays, China will hold the third plenary session of the 20th Central Committee next month, a meeting that is typically associated with major economic reforms or policy announcements. The postponement of the Third Plenum in 2023 led to widespread speculation that the Chinese Communist Party under President Xi Jinping was divided or undecided about economic policy, particularly in the wake of the Chinese economy’s underwhelming performance after Xi’s “Zero Covid” policy was lifted in late 2022.
The meeting comes at a time when bifurcated narratives about the Chinese economy permeate the media outside China. One narrative focuses on the structural problems and the policy fumbles that have riddled Xi’s administration for several years, highlighting low economic growth rates, high unemployment, faltering consumption, demographic headwinds and a loss of confidence in the future. The other narrative focuses on China’s major successes in manufacturing, particularly in new energy sectors, such as solar and electric vehicles, through industrial policy and state-led development. China appears to be catching up and threatening the dominance of capitalist economies in these important sectors as well as artificial intelligence, or AI, as well as semiconductors and aviation.
Overcapacity and export gluts are critical parts of both narratives and if viewed comprehensively connect the bad with the good. China’s inability or unwillingness to boost domestic consumption necessarily focuses economic policy on export-led manufacturing to fuel growth. So while they emphasize different aspects of China’s political economy, the two media narratives are mutually dependent on each other.