Commentary: Watch what China does, not just what it says, after unsurprising economic plenum

HONG KONG: The third plenum of China’s Communist Party (CCP) concluded recently without new stimulus or deep reforms, but that does not mean there isn’t welcoming news.

While the communique released after the closed-door meeting led by President Xi Jinping contained few surprises, it could also be viewed as maintaining stability and certainty. In a major election year for many countries where we have already seen drastic changes or uncertainties in governments, the less-than-surprising outcome may provide what the market seeks in an uncertain world.

The broad goals emphasised in the plenum have not changed — economic recovery, technological innovation, market reforms.

Despite its economic challenges, China seems more cognisant that any drastic measures may introduce volatility and potentially derail plans in achieving its 5 per cent growth target for 2024.

A long-term shift is what the world’s second-largest economy is gunning for, when the drivers of its meteoric rise have been slowing down.

Before the plenum, official data showed the Chinese economy expanded by just 4.7 per cent in the second quarter this year, among its slowest growth in recent years. When combined with the first quarter data of 5.3 per cent growth, China may still be on track to meet its year-end target.

But for the market, it may be cutting too close for comfort, given the short-term challenges ahead. This may explain why the plenum has focused on the long term, and placed emphasis on enhancing people’s quality of life as one of the means to boost overall consumption which some economists have been urging for, among others. 

Still, the plenum offered some positive signals for businesses.

One of the most notable aspects of the communique was the