Yan Yu and Banny Wang contributed to this article.

The 19th Chinese Communist Party (CCP) Central Committee concluded its fourth plenary meeting (“fourth plenum”) on October 31 in Beijing after four days of closed-door meetings. With just over 200 members, the Central Committee is comprised of the Party’s top leaders, who are appointed every five years. The full committee meets at least once per year for plenary sessions. 

The fourth plenum concluded with a communique and a press conference that largely reiterated high-level commitments made by China’s leadership in recent years. The Central Committee released a more comprehensive official policy decision several days later, accompanied by a drafting explanation authored by President Xi Jinping himself. If you didn’t catch any of these readouts, here are the five main takeaways from last week’s plenum:

1. The CCP continues to expand its power over all aspects of Chinese society.

Unsurprisingly, the trend of an increased role for the Party, which has been a mainstay of President Xi’s leadership, does not appear to be subsiding. The communique highlights the Party’s central role, stating that, “government, military, society, and schools; north, south, east, west, and center—the Party leads everything.” It can be assumed that this includes some aspects of China’s economy. The Chinese government will stick to a system of “socialism with Chinese characteristics, with the Party playing an absolute leading role to govern the country.”

2. China promises increased opening, but will also enact new policies with concerning implications for foreign companies.

Lawmakers stressed that China’s economic opening and reform will not change despite concerns that it will be increasingly difficult for foreign companies to conduct business in China. Coastal areas will continue to be used as pilot zones for reforms, like China’s 18 free trade zones and a planned free trade port in Hainan. Specifically, officials mentioned that China expects to eventually  implement full market access openings in manufacturing, service, and agriculture industries, with incremental openings in finance, telecommunication, education, healthcare, and media. This is the first time China has indicated that it would completely open its agriculture sector. China also committed to fully implementing its new Foreign Investment Law, promoting fair competition, and enhancing intellectual property rights protection—all key issues in ongoing trade negotiations between the United States and China. 

However, the decision document also outlines plans to establish a “new national system for making breakthroughs in core technologies under socialist market economy conditions,” which raises concerns similar to state-driven industrial policies like Made in China 2025 that aim to drive technological development while disadvantaging foreign companies. It also mentions developing a national security review mechanism and unreliable entity list that could be used to target foreign companies.

3. Both the state-owned economy as well as the private sector are important to Chinese policymakers.

The plenum included parallel commitments for strengthening the state-owned economy and encouraging and supporting the private-sector, indicating a continuation of current policy. Specifically, the press conference noted that a fair legal environment must be provided to privately-owned enterprises and foreign-invested enterprises. To ensure a level playing field, China will intensify enforcement in the areas of anti-monopoly and anti-unfair competition. Moving to economic development, the mechanisms for  allocating the essential factors for production—like labor, capital, land, technology, management, and data—will become more market-based. This is the first time that land and data have been discussed in this context. As first highlighted in the 18th CCP third plenum, the communique reaffirmed a previous pledge for the “market to play a decisive role in resource allocation,” indicating the  continuation of market-based reforms.

4. China continues to emphasize rule-of-law within the Chinese system.

Specifically, policymakers admonished the use of personal connections to illegally interfere with law enforcement and judicial procedures and also called for the expansion of public interest lawsuits, especially in the areas of environmental protection and food and drug safety. They also promised more severe punishments for violations and the establishment of a punitive damages system. In addition to strengthening the system itself, lawmakers called for improvements to the country’s system of disseminating basic legal knowledge throughout society so that citizens are better informed.

5. China is not budging on “one country, two systems.”

Policymakers announced policies that would continue efforts to further integrate Hong Kong with mainland China in the eighth consecutive month of protests there. On the economic front, China plans to double down on its “carrot” tactic to bring Hong Kong closer into its Greater Bay Area economic integration project. While the “one country, two systems” model is nothing new, readouts from the fourth plenum placed a relatively new emphasis on legal enforcement and national security for Hong Kong. Officials stated that China would not tolerate any challenges to the “one country, two systems,” bottom line, framing separatism and foreign interference in a national security context. 

China is also looking to improve the mechanism of appointing and removing Hong Kong’s governors and officials and enhance efforts to promote “patriotic consciousness and spirit” through education, both issues that have sparked protests in Hong Kong in the past. Also re-affirming jurisdiction over Hong Kong, party officials clarified that the National People’s Congress Standing Committee is the principal body for interpreting Hong Kong Basic Law. 

*      *      *

All in all, this year’s plenum was anticlimactic, given the long delay of the meeting itself, and the ensuing rumors that there could be high-profile changes to China’s development and leadership succession plans. This is unsurprising, as announcements made at plenums often represent only what is agreed upon within the Party, that is, the lowest common denominator of a vast and complicated body of policymakers with competing interests. The humdrum repetition of current Party goals may also be Beijing’s safe bet while deeply engaged in high-stakes trade negotiations with the United States. 

 

Jack Kamensky is a business advisory services manager at the US-China Business Council.

Erin Slawson is an editor at the US-China Business Council.

Posted by Jack Kamensky and Erin Slawson