Has China, after long-awaited third plenum, given its market a demotion?
- Where earlier plenums declared a ‘decisive role’ for the market, that wording has been removed in this year’s communique, suggesting diminished importance
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China’s Communist Party wraps up policy meeting amid growing uncertainties
The role of the market in China’s economy has seemingly been downgraded by the country’s political leadership, with high-level members of the Communist Party making a small but significant adjustment following a meeting expected to set the tone for economic policy over the next several years.
Governance should be both flexible and effective, it said, to “remedy market failures”, while unleashing the “internal driving forces” and “creativity” of society.
The use of “better leverage” in reference to the role of the market at the twice-a-decade event – formally known as the third plenum of the party’s 20th Central Committee – slightly deviates from rhetoric used at the same gatherings in 2013 and 2018, when the market was granted a “decisive role” in resource allocation.
It is “a question of balance” in terms of managing the roles of the market and government intervention in the economy, said Ding Shuang, chief economist for Greater China at Standard Chartered Bank.
“Compared with the past, it may signal that we should not entirely rely on the market, and emphasise the need to make up for market failures,” Ding said.
‘Better leverage’ is not as strong as ‘decisive force’
