The third plenum of the central committee of China’s Communist Party kicks off on Monday. Investors will be watching for new policy directions that could finally resolve a broad range of long-running issues beleaguering the world’s second biggest economy, from fiscal relations between the central and local governments to the country’s ageing population, Bloomberg reports.
Back in December, top leaders indicated that a “new round of fiscal and tax reform” may be on the horizon. Pundits say details of this could be unveiled at the four-day, closed-door plenum – potentially in the form of Beijing footing more bills to drive economic growth as regional governments struggle with mounting debt risks and reduced income from land sales.
Bloomberg says some economists also expect the nation’s value-added tax (VAT) system to be overhauled, as a way to broaden local authorities’ income streams. VAT is the country’s largest source of tax revenue.
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An embattled real estate sector remains a chronic problem for the economy. In June, the State Council asked officials to keep coming up with new policies to absorb existing housing stock. This followed a major housing market rescue package announced in May.
Attendees at this year’s plenum include some 200 full members of the central committee, about 170 alternate members and leaders from the party’s anti-corruption agency. Some academic representatives and other members of the party congress could also be invited.
At the last plenum, in 2018, Beijing pledged to restructure the party, government, military and other public bodies and promised to balance the powers of central and local governments. Previous landmark plenums have introduced major reforms – including the relaxation of China’s one-child policy in 2013.
