Key takeaways from China’s Third Plenum 2024

The communiqué of the Third Plenum of the Chinese Communist Party’s (CCP) Central Committee, which concluded on July 18, contains no major policy initiatives to address the country’s near-term growth challenges. This was greeted with a sense of disappointment by Western analysts even though not many of them had expected Chinese leaders to announce a major fiscal package or other measures. Instead, the communiqué reaffirms the CCP’s long-term vision of deepening reform and pursuing modernization—Chinese style—based on the three key pillars of innovation, green energy, and consumption as growth drivers.

Innovation, according to the communiqué, will be driven by further development in education, science and technology, as well as talent cultivation. China has done well in adopting, refining, and rolling out existing technologies; the open question is whether it can foster endogenous breakthrough innovations to stimulate growth and become self-sufficient in high tech in the face of US controls.

China’s green energy sector has seen much progress in the manufacturing of electric vehicles (EVs), batteries, and solar and wind energy products. China has achieved global dominance in the supply chains of these products, which have increasingly contributed to its economic growth and posed a threat to Western competitors in world markets by creating overcapacity which has increased trade tensions. The communiqué doesn’t seem to take this overcapacity problem seriously.

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