Author : Manoj Joshi

Expert Speak Raisina Debates
Published on Sep 05, 2019
As the Fourth Plenum approaches, the Communist Party of China will use this platform to further discuss important socio-political and economic issues.
China banks on the Fourth Plenum to set future course

In a speech on Tuesday, China’s President Xi Jinping said that China was entering a period of “concentrated risks”—economic, political and diplomatic—and that the country needed to have the ability to take them on.  Speaking   to young and middle-aged officials at the Communist Party of China (CPC)’s Central Party School, he said that the emerging period was “unthinkably challenging” and required both courage and the mettle to win. The situation, he went on to add, would only get more complex as the future unfolded.

Xi’s setting of the situation invoked the CPC’s history of protracted war against a variety of threats ranging from the slowing economy and an intensifying challenge from the US. Repeatedly using the terminology of war—“combat spirit”, “resolute struggle”,  “victory”, “warriors”—he said that the struggle would decades and could well persist till 2049, the centenary of the founding of the People’s Republic of China (PRC).

The speech is part of a build up to the coming celebrations of the 70th Anniversary of the founding of the PRC. Equally, it forms the backdrop of the Fourth Plenum of the CPC which is being convened after the anniversary celebrations. The announcement of the Plenum, which is a meeting of the Central Committee, the apex forum of the party, was made at the end of August.

The convening of the Third Plenum  in February last year was a bit of a surprise since the second had been held in January 2018. But the reason for this was the important development related to the abolition of the two term limit of the Presidency from the country’s Constitution. This was done at the March 2018 annual sessions of China’s Parliament, the National People’s Congress and the Central People’s Consultative Committee. Note that there is no formal limit to Xi’s tenure as the General Secretary of the CPC and as the Chairman of the Central Military Commission.

The CPC is required to hold a plenum, which is a meeting of its Central Committee,  every year between Party Congresses, and the delay in announcing the fourth was attributed by some to party infighting. The gap between the Third and Fourth Plenums has been the longest since the early 1970s. However, most observers say that whatever be the reasons for the timing, there is no question that Xi Jinping remains firmly in control of the Party and there is little, if any, evidence of unrest against his leadership.

It is not as if Xi has not convened other high-level consultations with his Party colleagues in this period. In January, officials from across the country were summoned to the Central Party School, and XI dressed down the party and said that the party “was at risk from indolence, incompetence and of becoming divorced from the public.” He called on the party to shoulder the responsibility of dealing with unanticipated risks to the economy.

In May, he presided over the Politburo which decided to launch an education campaign targeting officials at and above the county level. The aim of the campaign was to consolidate the Party around Xi and to gear it up for  the growing challenges that China is confronting.

As the Fourth Plenum approaches, there are three major issues before the CPC. The first is the economy and traditionally one of the Plenums is used to discuss economic issues. For example, the Third Plenum of the 18th CPC Congress in 2013 took the key decisions to give the market a decisive role in the Chinese economy. It is another matter that the Chinese economy has resisted greater marketisation.

Several western observers are cutting their forecasts of the Chinese GDP growth in 2020 to below 6 per cent. The official manufacturing purchasing manager’s index for August indicates that sector activity contracted for the fourth successive month. These warning signals are there in the face of the Chinese refusal to cut their benchmark policy rates or providing fiscal stimulus to the economy. The escalation of tariffs by the US only adds to the headwinds confronting China.

The second is the ongoing strife in Hong Kong and its implications. While there are expectations that the authorities in Beijing may intervene in putting down the protests by force, Beijing is actually interested in smothering the fire, rather than putting it out through drastic means, such as those used in Tiananmen. Hong Kong Chief Executive Carrie Lam’s decision to withdraw the extradition bill, the issue that triggered the protests, could be a first step in that direction. This was foremost of the five demands of the protestors. It remains to be seen if this could well be a move to isolate the most strident of the protestors and gain the support of the “silent majority” of the city.

All this is happening with the backdrop of the trade war with the US which has morphed into a larger struggle between an established and a rising power. On Sunday, the fourth round of USA tariffs on Chinese goods came into play, targeting Chinese imports from meat to musical instruments with 15 per cent duty. In turn, China hit back with tariffs ranging from 5 to 25 per cent on US goods, including US oil. As of now the US has imposed tariffs on $360 billion worth of Chinese goods and China has hit back with levies on $ 110 billion worth of US products.

On Tuesday, Donald Trump said that Chinese manufacturing would crumble if the US pressed on with its tariff regime. However, observers said, the US was also being hurt in the process. The US President insisted, however, that the main impact of the trade war was on China and that the US was in a strong negotiating position and warned that the deal would get much tougher when he won the next election.

The indications are that China is hanging tough on the negotiations and so far no date has been announced for the next visit of Vice Premier Liu He and his team.

Meanwhile a statement following a meeting of China’s Financial Stability and Development Commission on Sunday hinted that China was getting ready for a prolonged trade war. According to a statement of the Commission, which is chaired by Liu, China will ease monetary policy and increase fiscal spending in response to the trade war. It suggested a variety of means for financial institutions to help local governments promote investment.  This is not quite tantamount to an economic stimulus as such and trade war was not specifically mentioned in its statement.

Many observers believe that officials are waiting for signals from the top before adopting any clear-cut policy response. The Fourth Plenum, therefore, could be the place where the way forward is decided. But whether this will actually happens is difficult to say. The official announcement of the Plenum spoke of the Central Committee being briefed on the work of the PB and discuss important issues “concerning how to uphold and improve the system of socialism with Chinese characteristics,” along with issues relating to modernising and strengthening China’s governance system. That is neither here, nor there.

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Manoj Joshi

Manoj Joshi

Manoj Joshi is a Distinguished Fellow at the ORF. He has been a journalist specialising on national and international politics and is a commentator and ...

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