Politburo schedules Third Plenum for July

It’s finally happening.

On Tuesday, just before the country takes off for the May Day holiday, the Politburo announced that the Central Committee’s Third Plenum will take place in July.

This is a big deal: The Plenum is expected to unveil a new round of sweeping economic reforms, similar to the package released at the 2013 Third Plenum.

In case you have been living under a rock:

• The Third Plenum had been expected to be held in October 2023 – but then wasn't.
• The Party has kept mum on why they didn't hold the Plenum – and when or if they would ever hold it.
• The Party’s silence has increased policy uncertainty and undermined business confidence.

The Politburo meeting readout that announced the Plenum indicated that the reforms will be wide-reaching and “comprehensive.”

• However, there were no details on what the reforms will actually be.

The Politburo made it clear that the stakes are high:

• “[The reforms are] necessary for…winning the strategic initiative in increasingly fierce international competition.”
• “[They are] also necessary for solving the unique problems of a large party and building a stronger and more powerful Marxist political party.”

Translation:

• If we don’t get these reforms right, the West will succeed in containing China’s rise.
• If we don’t get these reforms right, we could also lose our governing mandate.

Get smart: Arguably the biggest question going into the Third Plenum is whether or not the Party will give more explicit support for the private sector.

• Doing so will be key for putting China’s economy on a sustainable long-term footing.
• Failing to do so, on the other hand, will limit China’s medium-term growth potential.