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China’s economic challenges have proliferated in the almost two years since Xi Jinping last convened a full meeting of the Communist Party. But politics remain at the top of his agenda.
The party’s Central Committee is expected to gather behind closed doors Monday for the first time since February 2018 -- the longest stretch the 200-plus-member body has gone without meeting since China began its reform era four decades ago. And Xi looks poised to pick up where he left off: solidifying control over the ruling party and the country of almost 1.4 billion people.
While such “plenums” are closely guarded affairs, state media have said party leaders would make “greater efforts in sticking to and improving the system of socialism with Chinese characteristics, as well as strengthening China’s system and capacity for governance.” That arcane language suggests a sweeping agenda focused on further centralizing power around the president that may include reshuffling some key leadership roles when it ends on Thursday.
“Xi has defined China’s governing system as really incredibly broad, encompassing everything from how the party manages politics to the economy to society to culture to itself to the environment,” said Trey McArver, co-founder of Beijing-based research firm Trivium China. “It could end up being a relatively comprehensive or broad-based approach to everything.”
Xi has repeatedly warned against complacency in recent months, complaining in a speech last month that some cadres were “weak-kneed and unwilling to fight” against the party’s growing and long-term challenges. China is projected to see the slowest growth in gross domestic product in almost three decades this year -- a concern made worse by the trade war with U.S. President Donald Trump.
Some observers had expected this plenum to focus more on economic policies, since the one last year also dealt with politics. While a rash of negative economic data have raised speculation that the party leadership might take more decisive action to boost domestic demand, Xi also needs to make sure the party’s -- and thus his -- rule can endure the coming downturn.
“We’d like to see how the big topics such as growth, stability and reforms are being prioritized,” said Peiqian Liu, China economist at Natwest Markets Plc. in Singapore. “For instance, the pledge for better party building might lead to higher confidence and greater acceptance of slower growth among the top leaders, and that local officials can be more focused on reforms.”
The last time the Central Committee met 20 months ago, Xi secured the body’s blessing to repeal constitutional term limits keeping him from serving as president past 2023. The move represented one of the party’s sharpest departures from the model of collective leadership embraced after Mao Zedong’s tumultuous and personality-driven rule.
Still, plenums are rarely that dramatic and the results often take months or even years to come into focus. The outcome will probably first be detailed in a jargon-laden communique released after the meeting.
Although the communique may provide important signals about where China’s political system and its economy are headed, it’s unlikely to answer key questions such as how the leadership will manage slowing growth, mounting debt and a rapidly aging population.
China’s list of economic headaches includes the downdraft from the trade war with the U.S, factory-price deflation, a fragile financial system and spiraling food costs in the wake of a catastrophic disease epidemic among the nation’s pig herd. Even so, policy makers are wary of embarking on large-scale stimulus measures for fear of resurgent debt levels or bursting the bubble in the property market.
“We have pretty low expectations of this plenum producing a decision that will be meaningful for markets and investors,” said Tom Rafferty, principle China economist for the Economist Intelligence Unit. “What they are looking for is a clearer economic road map for the 2020s, but this plenum is not going to provide that.”
(Updates with length of meeting in third paragraph. An earlier version corrected a deck headline to show the gap between meetings was long.)
--With assistance from Jeffrey Black.
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