China is preparing for the Third Plenum meeting, which takes place next week. Here's why real estate is unlikely to be the primary focus
China's real estate concerns may be vast, but observers anticipate that the upcoming Third Plenum will concentrate on other issues, such as high local government debt levels and a push for sophisticated manufacturing.
The much-anticipated policy meeting, set for Monday through Thursday, is a key gathering of the ruling Communist Party of China's top officials that occurs only once every five years. This plenum was widely expected to be held last fall, but it was postponed.
"The key challenge faced by Beijing is to find an alternative fiscal system, as the current one, which relies heavily on land sales, is under severe pressure due to the plunging land market," Larry Hu, chief China economist at Macquarie, said in an email to Industrialist.
He anticipates next week's summit to concentrate on budget reform and other structural reforms. Hu noted that cyclical policies, which can involve property, are typically reviewed at more regular meetings, such as China's Politburo, which is scheduled for late July.
"Other than that, policymakers are also likely to reiterate [their] commitment to innovation, i.e. the so-called new productive forces," Hu added, referring to Beijing's push to encourage advanced manufacturing and high-tech.
The ruling Chinese Communist Party's Central Committee, which consists of over 300 persons, including full and alternate members, normally has seven plenary meetings throughout each five-year tenure.
The Politburo is a committee comprised of approximately 24 members.
The Standing Committee of the Politburo, comprised of seven senior members, is China's highest circle of authority, led by Xi Jinping, the Party's General Secretary and President.
The Third Plenum has usually concentrated on economic issues. Under Deng Xiaoping's leadership in 1978, the summit formally announced key reforms for the communist state, including as China's "reform and opening."
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