China braces for slow growth as Communist Party conference hints at tax expansion & more spending

The Chinese regime appears to have braced for slow economic growth as the four-day conference has concluded without any big-bang announcements.

The Communist Party of China (CPC) held its ‘Third Plenum’ conference this week. It is a crucial meeting that takes place in the third year of the incumbent Chinese leader’s term and sets tone for the policies for the next five years.

While major announcements have been made after previous Third Plenums conferences, none has been made this time.

Takeaways from Communist Party’s Third Plenum

At a time when China continues to reel under continuing economic downturn brought by weak domestic demand, the collapse of the real sector that at one point amounted to a fourth of country’s economy, and ballooning of debt, the CPC has stressed on the need to focus on qualitative growth instead of numbers and has completely skipped any big-bang reforms.

More from World

Nepal's new PM pays homage to people died during the Gen Z protest in her first national address This Week in Explainers: How recovering from Gen-Z protests is a Himalayan task for Nepal

While the CPC signalled continuity in the way that the conference pledged to continue to follow Chinese President Xi Jinping’s plan to use advanced manufacturing to generate growth, there were indications that tax hikes and more government spending may be in the offing, according to Bloomberg.

The agency quoted Han Wenxiu, Deputy Director at the Office of the Central Financial and Economic Affairs Commission, as saying that local governments’ financial resources will be increased and their tax sources will be expanded.

Han further said that “the proportion of central fiscal expenditure will rise” in total government spending and that the Chinese regime will study tax regulations “compatible with new sectors”.

Impact Shorts

More Shorts

‘The cries of this widow will echo’: In first public remarks, Erika Kirk warns Charlie’s killers they’ve ‘unleashed a fire’

Trump urges Nato to back sanctions on Russia, calls for 50–100% tariffs on China

Other priorities for Xi’s regime include working towards an improved macroeconomic policy, which potentially include a way that avoids abrupt crackdowns like the ones on education and tech sectors in recent years which adversely affected investor confidence, according to the agency.

China’s continuing economic crisis

Weak domestic consumer demand, doomed real estate sector, and spiralling trade conflict with the West continue to plague China.

While Chinese regime and international observers had already set modest growth targets this year, the June-quarter recorded the slowest economic growth since 2022 and undershot even the modest projections, according to Bloomberg.

It’s not just the record low business and consumer sentiment that plagues China. The export-centric revival strategy faces the challenge of steep tariffs imposed by Europe and the United States on electric vehicles (EVs), solar panels, metals, etc.