China’s Leadership Aims For Technological Self-Reliance Amid Economic Struggles

China’s Communist Party is concluding a key meeting that is expected to endorse leader Xi Jinping’s vision for technological advancement and national security enhancement. The Central Committee’s closed-door session is likely to focus on achieving economic self-sufficiency in response to growing Western restrictions on advanced technologies like computer chips and artificial intelligence.

Economic growth in China has slowed to 4.7% in the April to June quarter, with the real estate sector slump and weak consumer confidence posing significant hurdles to recovery from the COVID-19 pandemic. Analysts predict that the new policies will emphasize technological investments and upgrades, aligning with Xi’s goal of “high-quality development.”

State media reports and government policy statements indicate that Beijing will continue prioritizing investments in technology, encouraging companies to modernize their equipment and expertise. This approach is consistent with Xi’s recent remarks on reform and opening-up at major meetings. The party’s newspaper, Global Times, noted that the meetings aim to resolve institutional challenges and promote high-quality development.

Despite tighter Communist Party controls over various sectors, Chinese leaders assert that the country will stay open to foreign investment. However, this claim conflicts with earlier promises of further economic opening and pro-market reforms. Teeuwe Mevissen, a senior strategist at Rabobank, suggests that Beijing might introduce new incentives for foreign investors and measures supporting “common prosperity,” ensuring that ordinary Chinese benefit more from economic growth.

Local governments are facing financial pressure due to heavy debt accumulation. The crackdown on borrowing by property developers has led to a real estate crisis, cutting off a vital source of tax revenue from land-use rights sales.

This week’s meeting is the third plenary session of the 205-member Central Committee, which began its five-year term in 2022. Third plenums typically set major economic and policy agendas. While significant stimulus spending is unlikely, China’s economic challenges might necessitate more substantial measures this time.

In conclusion, China’s leadership is focused on advancing technological self-reliance and addressing economic issues, balancing national security with efforts to attract foreign investment and support local economies. The decisions made during this meeting will be pivotal in shaping China’s future economic policies and growth strategies.