A short and simple summer edition of China Business Digest here, focusing on China post-Plenum path with uncertainties and challenges, but also opportunities and potentials if you can see them.
Observers outside China have been watching the Third Plenum of the Chinese Communist Party (CCP) 20th Central Committee that wrapped up on July 18, and study the Communique for directions and hints on future policy moves. The policy document illustrates strategic roadmap for China, in the next five years and beyond, prioritising long-term development and technological advancement over short-term economic fixes.
As a UK-China business service provider, Crayfish.io is paying particular attention to the policy document says about economy, science and technology, trade and finance, and healthcare. We noticed strong emphasis on science, technological self-reliance, innovation as drivers of future growth, reforms on both the ‘pull’ and ‘push’ sides, i.e gradual market-oriented adjustments and building a strong foundation for innovation.
Some of our key takeaways:
👉 Tech self-reliance and global tech leadership: prioritising technical self-sufficiency in critical technologies, particularly in areas like semiconductors, artificial intelligence, and biotechnology through heavy investments in R&D, innovation, talent cultivation, and domestic industrial upgrading; striving to become a global tech leader by expanding technological footprint through investments, acquisitions, and partnerships
👉 Healthcare and pharmaceutical reform: pushing for quality improvement of public hospitals and a multi-tiered healthcare system, medical insurance reforms including reclassification of medical services and adjusted reimbursement rates, supporting innovation and R&D in the pharmaceutical sector
👉Pushing for power market reform, renewable energy, and energy security
👉Expanding trade relations and pushing for institutional reforms while emphasising geopolitical risks for trade and investment
👉 Overhauling financial system by streamlining regulations, enhancing capital markets, and directing financial resources towards strategic sectors, increasing support for local governments and expanding the role of social bonds through fiscal and taxation reforms
In essence, China is undergoing a complex and multifaceted transformation. Its success in achieving these goals will have profound implications for the global economy, geopolitics, and technology landscape.
While many China watchers outside saw ‘old wine in no-so-new bottles’, cautious optimists such as author and sinologist Pascal Coppens believe the latest blueprint could be a catalyst for significant changes in the next decade. ‘The emphasis on science, technology, and innovation excites me as they are deemed crucial for unlocking China’s potential by 2035. The true test, however, lies in whether these plans can address the economic imbalances’ he wrote. Glass half-full or half-empty, what matters ultimately is how effective will the ambitious plans be implemented.
Some of the key phrases in the Communique have caught our attention earlier. We’ve shared our reading of those, about market mechanism, market environment and the institutional basis of market economy. You can read them here.
On a separate but relevant note, the IoD China Group(tag), chaired by Steven Lynch MBE(tag), hosted the UK-China Inaugural Summer Conference in late June, prior to the Plenum. The event focused on strategic engagement and policy discussions regarding the current and future state of UK-China relations. The conference explored ‘the importance of strategic engagement and constructive dialogue, a balanced approach to navigating the complexities of the UK-China relationship, and recommendations for the new UK government to prioritise both cooperation and competition.