Staying the course: the Fourth Plenum and China’s future

Staying the course: the Fourth Plenum and China’s future

The highly anticipated event did not produce outline a leadership transition as many had expected.

WHAT’S HAPPENING?

After several days of closed-door meetings, the Fourth Plenum of the Chinese Communist Party (CCP) concluded and revealed the CCP’s agenda for the coming months.

KEY INSIGHTS

– Beijing looks set to take a more active role in dealing with the Hong Kong crisis through ‘legal means’, including possible changes to how Chief Executives are selected
– Despite rumours to the contrary, President Xi Jinping remains steadfast in his authority and looks to have consolidated his power, with the plenum endorsing his policies and the status quo
– A lack of discussion of economic issues and necessary reforms risks possible stagnation in the economy

NO KABOOM?

In late October, the Political Bureau of the Communist Party of China (CPC) held the fourth plenum of the Nineteenth Party Congress, attended by over 300 full and alternative members of the Party’s Central Committee. The plenum sessions were conducted behind closed doors and the only official information on the discussions was featured in the communiqué released by the Central Committee.

Faced with a number of setbacks and concerns, President Xi and his faction’s hold over the Party were rumoured to have diminished. The Hong Kong protests, the trade war with the US and a slowing economy have created an opportunity to challenge Xi’s standing. The plenum was also rumoured to have been delayed: the last meeting was conducted in February 2018, leaving the longest gap between plenums in the post-Mao era.

This led to rumours of possible changes in the party’s leadership, perhaps even a lessening of Xi’s control. The rumours included the possible expansion of the Standing Committee from seven to nine members and signalling of Chongqing CPC Secretary (and Xi ally) Chen Min’er as a successor to Xi. Neither of these changes occurred, as the only personnel announcements were full membership being granted automatically to two alternative members, Ma Weiming and Ma Zhengwu, due to their long involvement in the Party.

BEHIND CLOSED DOORS

Photo: Aleksandar Pasaric/Pexels

As the communiqué is the only official document released following the plenum, it provides insight into the issues that were raised and how the Party plans to act on them in the coming months.

Despite what some China watchers suggested, Xi remains firm in his position of authority. There were no major upheavals in Party appointments and the communiqué shows no deviance from ‘Xi Jinping thought’ or the ideology of socialism with Chinese characteristics. According to former South China Morning Post editor Wang Xiangwei, the Plenum’s official agenda of ‘discussing improvements in the party leadership’s capacity for governance and decision’ is a key part of ‘Xi Jinping thought’, of the Party leading the country. This signals that Xi has used the plenum to further entrench his control of the Party. Moving forward it is clear he will remain steadfast in his authority.

The communiqué also made brief mention of the unrest wracking Hong Kong. Without directly mentioning the protests, the communiqué included a pledge to ensure national security through ‘legal means’. Referring to the Special Administrative Regions of Hong Kong and Macau, it reiterated the party’s position that ‘one country, two systems’ would remain a core national policy. It also said that the party will improve upon the relevant laws and change how Chief Executives and other officials are appointed in Hong Kong, especially considering the unpopularity of, and frustration with, Chief Executive Carrie Lam.

Shen Chunyao, head of the National People’s Congress’ committees overseeing the Basic Law of Hong Kong and Macau, confirmed that implementing the ‘one country, two systems’ policy was a key discussion point at the plenum, focusing on enhancing the party’s governance of the two cities. Shen stated that policy meant that Hong Kong should be “governed by the Hong Kong people”, but that “one country” is the top priority.

WHAT DOES THE COMMUNIQUE ACTUALLY SAY?

Photo: Army Sgt. Amber I. Smith/Department of Defense

During the five months of protests in Hong Kong, Beijing has taken a hands-off approach, letting the Hong Kong government dictate the response. Now, with potential plans to change how the Basic Law is interpreted, the CPC are poised to increase their involvement in Hong Kong and Macau. The communiqué signals that the Party is ready to make their move on Hong Kong and ensure that ‘one country, two systems’ is maintained, despite increasing calls for greater autonomy and even, in some quarters, independence. Hong Kong and Macau could find themselves losing more of their autonomy and freedoms as the Party adopts more legalistic interpretations of the Basic Law.

The communiqué was missing any significant mention of the economy. The Chinese economy is facing a significant economic slowdown—third quarter economic growth of only 6% is the lowest rate for China since 1992. Although the US-China trade war is a major factor, the slowdown would have eventually happened. Dealing with factors such as an aging population and an awkward transition from a manufacturing economy to a service-based one, China is no longer able to fully reap the same level of foreign investment as it once did. Even more concerning are reports of Chinese officials faking economic data, suggesting that the growth may be even slower. Myriad issues, including the trade war and an outbreak of African swine fever that has decimated the pork industry, make the management of China’s slowing economy even more critical. Yet during Fourth Plenum, there was seemingly little discussion of what should be done.

The communiqué only mentioned the economy in broad terms, referring to increasing pressures and the need to reform. It stressed the importance of “the dominant role of the public sector,” meaning state-owned enterprises, while also stating that the market will be allowed “to fully exercise its decisive role in allocating resources”. This further shows the communiqué as merely endorsing the status quo. It also shows that there will be no major changes or reforms for the economy, at least for now. It is possible the Party is waiting for the trade war to end before announcing economic reforms, ensuring better control of how the reforms are implemented.

Another possibility is that the government will use economic reforms as leverage in upcoming trade talks with the US. The danger here is that a lack of action could lead to a greater downturn in the Chinese economy. Moribund growth and false reporting could eventually lead China to draw back on its ambitions or go into more debt as Beijing continues with massive projects like the Belt and Road Initiative. It could also have a damaging effect on the daily lives of ordinary Chinese people. As the rift between rich and poor grows larger, a slowdown could see the Party could begin to lose their support of middle-class Chinese.

The Fourth Plenum, lacking any kind of shocking twists and turns, was a relatively dull affair. That does not mean that it was not an important one. It signals the future trajectory that the CPC plans to take China. It has reinforced Xi’s continued control over the party, endorsing his policies and the nation’s status quo with the CPC unchallenged. This continuance means that social and economic reform will be slow and sparse and there will be no dramatic changes in foreign policy. Stagnation could set in and, as Xi showing no sign of stepping down or picking a successor, it could lead the Party down an increasingly turbulent route. But for now, the Party looks to be staying the course.