China’s leaders warn of economic risks, call for stronger social controls

Stay up to date with free updates.

Just sign up for Chinese policy and policies myFT Summary – delivered straight to your inbox.

China’s leaders warned of “risks” in areas such as the country’s slumping property market, government debt and financial institutions at a Communist Party meeting, and called for tighter social controls to ensure stability.

The party’s Central Committee gave security the same level of importance as economic growth, warned of geopolitical risks and said China must “lead global governance” at the conclusion of the third plenary session, one of its most important meetings, where it set out medium- to long-term policies.

In a statement issued after the meeting, policymakers wrote: “It is necessary to coordinate development and security, and implement various measures to prevent and resolve risks in key areas such as real estate, local government debt, and small and medium-sized financial institutions.”

They added that China should “weave a dense network to prevent and control social security risks, effectively maintain social stability” and intensify government propaganda. “It is necessary to strengthen the guidance of public opinion and effectively prevent and resolve ideological risks,” they wrote.

The statement from the long-awaited meeting of 363 members and alternate members of the Communist Party’s Central Committee chaired by President Xi Jinping is a general summary of the meeting. More details on any reforms could be released in the coming days in a separate document.

China’s economy is struggling to emerge from a property slump and restore investor confidence after a crackdown on the private sector. Xi’s vision for the economy focuses on high-tech manufacturing rather than domestic consumption, which analysts say is crucial to a full recovery.

While the 3rd session of the conference statement encouraged the development of market mechanisms, it completely missed any reference to consumer demand.

“It is necessary to make better use of the role of market mechanisms, and create a more fair and dynamic market environment.” [and] The statement said to “improve the efficiency of resource allocation,” while pledging to “better protect the market system” and “address market failures.”

The statement did not specify any reduction in the dominant role of state-owned companies in many sectors, which economists see as crowding out their private sector counterparts.

“It is essential to ensure that different ownership economies have equal access to factors of production,” the statement said.

The statement also promised to deepen reforms to the financial and tax system, but did not provide details. Analysts believe a better balance between central and local government finances is needed.

“The plenum has recast the government’s economic goals and acknowledged some key risks, but it inspires little confidence that the government has a strategy to effectively manage the economy’s cyclical and structural problems,” said Eswar Prasad, a professor at Cornell University and a senior fellow at the Brookings Institution.

Bert Hoffman, former director of the World Bank’s China office in Beijing, wrote on X that one of the notable differences between this statement and the previous historic third meeting in 2012 was the reference to markets.

In 2012, the goal was to give the market a “decisive role.” “This time, at least in terms of the statement, the role was less strong,” he said.

On foreign affairs, the statement stressed Xi’s pursuit of a multipolar world — which would mean a reduced role for the United States. “China’s modernization is a path to peaceful development,” the statement said, adding that it was necessary to “advocate a world of diverse poles.”

The statement stressed China’s ambition to become a “modern socialist power” by the middle of the century, without providing a detailed definition.

The party also formally accepted the “resignation” of former Foreign Minister Chen Gang from the Central Committee. Chen had disappeared without explanation last year and was replaced by his predecessor Wang Yi.

The statement said the Central Committee also confirmed the decision to expel former Defense Minister Li Shangfu and PLA Rocket Force officers Li Youchao and Sun Jinming from the party for “serious violations.” China’s Central Military Commission, also chaired by Xi, announced an anti-corruption investigation last year into equipment procurement.

Lee was replaced by Dong Jun, a former navy commander, in December.

(Additional reporting by Nian Liu, Tina Ho and Wenjie Ding in Beijing and Cheng Ling in Hong Kong)