You have to hand it to the CCP leadership: they don’t waste time. The Third Plenum ended just a week ago – and they are already getting to work. It has poured the equivalent of 400 billion euros into stimulating the economy, which has been limping along for months. But as gigantic as this package is, Xi Jinping has yet to implement urgently needed structural reforms, Finn Mayer-Kuckuk analyzes. The majority of the money is once again being channeled into state-owned enterprises.
Peter Hessler, former Beijing correspondent for The New Yorker, made a name for himself in 2001 with his book River Town. It describes life in rural China when it was still characterized by poverty and an underdeveloped economy. Almost twenty years later, he returns to the region and records his observations in what is now his fourth book on China. Fabian Peltsch spoke with the award-winning journalist and author about today’s youth, who instill hope for a more open China.
Shortly after the economic development strategy paper was published last Sunday, China’s government has already presented its first spending programs. It involves billions, primarily benefiting the idea of “high-quality development.”
The two measures are aimed at very different ends of the value chain. In the first case, the focus is on large industrial companies, and in the second case, on end customers, that is, ordinary citizens. The sum total of around 400 billion euros is very high. Such additional spending will certainly impact growth.
The consumption subsidies will be financed by new government bonds totaling one trillion yuan, which was already announced at the National People’s Congress in March. What is new is that the focus has now become clear.
Last week, the powerful Central Committee of the Chinese Communist Party deliberated on the continued promotion of the economy at its so-called Third Plenum. Party and government are largely identical in China. Party decisions are implemented without deviation and very quickly.
The 98 centrally managed state-owned enterprises are a logical place to start with initial economic control measures. These companies belong directly to the central government in Beijing. They are supervised by the State-owned Assets Supervision and Administration Commission of the State Council (SASAC).
The central state-owned enterprises are also seen as the “national team” of the Chinese economy. These include defense companies, shipyards, the nuclear industry, energy suppliers, oil producers and aircraft manufacturers.
If these large companies now go on a shopping spree for new machinery and equipment, German and European industries could also potentially benefit greatly. At a press conference in Beijing on Friday, SASAC head Liu Shaowei said that state-owned enterprises are to treat all types of suppliers equally when procuring.
If Liu holds his word, foreign companies will have the same opportunities as Chinese companies. According to him, the priority is to procure equipment of the highest quality at a reasonable price. However, economic policy is always shaped by domestic political constraints. Unemployment in China is high, so the temptation to prioritize domestic manufacturers is high.
The second stimulus program aimed at end consumers was far easier to understand on Friday. The property crisis and high youth unemployment keep consumption down. This has also been confirmed again by recent retail sales data from Shanghai.
The Japanese business newspaper Nikkei quoted a Chinese Ministry of Commerce representative explaining the reasons for the stimulus program: In addition to the current weak consumption, he cites the strong competition within China as a motivation. The oversupply of electric cars, among other things, has already resulted in overly cheap exports and sparked a trade conflict with the EU and other economies. The statement shows an awareness of the problem and a willingness to focus more on its own market when it comes to industrial output.
In your debut book, “Rivertown”, you described your life as a teacher in remote Sichuan in the 1990s. Now, you have returned to China to teach young students again, so your new book, “Other Rivers, is a sequel. Were you aware at the time that you would write such a follow-up decades later?
I had the idea that it would be interesting to return to these places and these people after about 20 years. Over the years, I’ve stayed in touch with my former students, visited them and written about them in magazines like The New Yorker. So, it made sense that I would do this book someday.
But you could not return to the same university in the city of Fuling. Why?
I had been in contact with the people in charge in Fuling since 2016 and they were interested. However, the political climate in Chongqing was difficult after the incident with Bo Xilai and the foreigners involved. Of course, I had nothing to do with it, but the city government didn’t want to take any risks. In the Chinese system, many things are not so much based on clear orders, but on fear. There is a general sense of nervousness. People try to take precautionary decisions to avoid getting into trouble. I wasn’t allowed to teach in Fuling, but I was allowed to teach in the neighboring province of Sichuan, which is very close by.
Your books were translated into Chinese and were also widely read there. Were people satisfied with the way you portrayed their lives?
‘River Town’ was not immediately translated into Chinese. I think if it had been, there would have been negative reactions, especially because of the way I described poverty. By the time the book was published in Chinese in 2012, people’s lives had changed so much that they looked back with nostalgia to that past time. It reminded them of what it was like when they were poor and the city was dirty and run-down. And it made them a little proud that they had got through it all. They were in the middle of this struggle to improve things and navigate through this new environment in China.
Did the younger students at Sichuan University know who you were?
I taught journalism there, and it was quite a challenge to get into my course. They knew who I was, and most of them had read things I had written. But I also had freshmen in introductory writing courses. Some of them, at least at the beginning of the course, had no idea who I was.
Some of the students were the same age as those back in Fuling. What differences and similarities did you notice?
They were immense, especially because almost all the students from Fuling came from the countryside: Over 90 percent of them came from farming families, who were generally quite poor. On the other hand, I did not have a single student from the countryside during my first semester at Sichuan University.
In one interview, you said that the students in Sichuan today seemed less childlike to you and instead more cynical or realistic.
The students in Fuling seemed very young. On the surface, they often looked like children, very simple, naive, looking at the world with wide eyes. However, my teacher colleague Adam and I had to keep reminding ourselves not to fall into this trap, because the truth was that many of them had been through very difficult things that we had never experienced or dealt with. They just didn’t have a lot of information. There was no internet connection back then. They had very little contact with people outside their region. Whereas at Sichuan University, the students were much more familiar with the system and knew how it worked. They were pretty smart. They were very practical and informed. Most use VPNs, virtual private networks, to bypass the Great Firewall.
Did you feel confirmed in the cliché that this generation of only children is spoiled?
It was actually quite the opposite. They had a very strong sense of responsibility. They felt this pressure because they were the center of the whole family. They were quite likable and modest. When I was teaching George Orwell’s Animal Farm, I asked the students which animals they identified with and they often chose very negative characters. They would choose the horse and say, I’m just like it. People can tell me lies, take advantage of me, and I’ll believe it. That was kind of sad, but also impressive in a way, because they just had no illusions. I think if you ask American teenagers, they tend to see themselves as the heroes, the ones who do everything right.
Are they less idealistic and hopeful about their future prospects than the students in Fuling?
There is a certain idealism, but it is very moderate. They are very modest in their expectations. When you talk to them about politics, some of those you get to know better often say: yes, democracy would be nice, but it’s not suitable for China. It won’t work here. But if we can have something that offers more freedom than what we have now, then we should have it. That’s the way they talk about the system.
But they also encountered Little Pinks, hardcore patriots …
There weren’t many of them in class. Or less than I would have expected. I brought up sensitive topics more than I did in Fuling. Teaching is an opportunity to give the students something they don’t get otherwise. I think that’s the point of foreign teachers. It wasn’t like I went in there and gave them a lecture on Xinjiang. Other topics are fine, for example, those related to the United States. And it’s important for them to get that perspective. I was able to do that in a way that wasn’t as threatening or awkward as I would have been in Fuling, in my 20s. I also knew I had a certain status as a writer, so I could probably get away with more.
You have also been attacked personally, and anonymously at that.
I still don’t know who did it. I know it came from a student newspaper that I commented on. But when it appeared on social media and on the Sichuan University notice board, my words were twisted into a fictional scene to make it seem like we had provoked a fight in the classroom, which never happened. The article was written by a quiet student named John. When I talked to him, I no longer believed he was a Little Pink. He felt bad. I don’t think he was responsible. The educated young Chinese are not as nationalistic as we believe. And it’s mainly an online thing, they create personalities there. In China, young people have few opportunities to express themselves.
Peter Hessler is known for his articles in The New Yorker and a book trilogy about China. He received a MacArthur Fellowship for “River Town” (2001), “Oracle Bones” (2006), and “Country Driving” (2010). After a stint in Cairo, Hessler returned to China in 2019 to teach at Sichuan University in Chengdu. His new book “Other Rivers” about this time was published by Penguin Random House in July 2024.
The Chinese Communist Party (CCP) concluded the Third Plenum of the 20th Central Committee last week. The Central Committee is one of the Party’s highest-ranking decision-making bodies and regularly meets in plenary sessions. Expectations were high in the run-up to the Plenum, and there was speculation about possible reform measures for the Chinese economy.
There are several reasons for the high expectations. In the past, Third Plenums were regular meetings during which economic reform measures were discussed. The historically high expectations are rooted in the Third Plenum of the 11th Central Committee, which decided in 1978 to embark on economic reforms in China after the end of the Mao era. Also, unlike the last major economic plenary session in 2013, no information was made public before this plenary session, leaving plenty of room for speculation.
The results of the past plenary session can be viewed from different perspectives. Firstly, it should be noted that Party conferences such as this one are high-level meetings that present policy initiatives at a comparatively abstract level. As such, we cannot expect concrete and detailed policy proposals where we already know the specific impact. Details will only emerge in many areas as specific initiatives and legislation are drafted.
In addition, we can look at the results and priorities of the plenary session from the perspective of the Party itself. To better understand these, the Party also publishes a statement by General Secretary Xi Jinping along with the official resolution. Based on this statement, we can identify several issues that the Party considers key.
First and foremost is the leadership role of the Party. In light of the numerous domestic and international challenges identified by the Party, it emphasizes its central claim to leadership, without which it believes China’s modernization is impossible. Anyone hoping for changes in the relationship between the Communist Party and the state or the party-state and economic actors will be disappointed by this resolution.
A second related aspect from the Party’s perspective is the balance between development and security. In the last few years, the relationship between economic development and securing the CCP’s rule has already shifted towards the latter goal. This Third Plenum has not changed this relationship. While economic development and growth remain important goals, safeguarding both internal and external security is equally central to the Party. Despite some reform announcements and promising further market opening in some areas, expectations should not be too high.
A third central point from the Party’s perspective is the emphasis on the role of innovation and “high-quality development.“ After the results of the National People’s Congress, China’s parliamentary equivalent, in March of this year, the focus on an innovation-driven economic model and the high-tech sector is unsurprising. The development of the “new productive forces,” which has been accelerated since then, is also reflected in this Central Committee resolution and clearly shows the direction in which the Communist Party intends to develop the Chinese economy over the coming years.
Apart from the Party’s perspective, we can also examine the results of the third plenary session from the perspective of international players. Regarding political risks for companies, we can highlight three main aspects.
Firstly, the development of a “high-level socialist market economy” needs to be mentioned. Although the Plenum’s resolution promises that “commitments to the public and non-public sectors should be honored,” it also clearly states the goal of investing state capital in sectors and key industries that strengthen national security and the Chinese economy. Despite the promise that a law that will “address core concerns of private companies” will be passed, the specifics are unclear at this stage. It is therefore unlikely that the Chinese economic model of state capitalism, as further focused on under Xi Jinping in recent years, will change fundamentally.
Closely related to this is the CCP’s plan to focus on an innovation-driven economic model. According to the Plenum resolution, this, too, is to be significantly advanced with state funds and in cooperation with state-owned companies. In light of the recent trade disputes with the European Union over electric vehicles, such conflicts can be expected to intensify going forward.
Finally, the resolution’s emphasis on securing supply chains should be mentioned. Like Western companies’ plans, the CCP also emphasizes the need to make supply chains more resilient, especially in the high-tech sector. This raises the possibility of future trade conflicts and potential market barriers, which companies should take into account in their political risk planning.
In conclusion, the high expectations in the Plenum have not materialized. Despite the proposed reform measures, there is no sign of a fundamental change of course, and factoring political risks into business decisions is more important than ever.
Dr. Carolin Kautz researches and teaches on Chinese politics and the Communist Party. She is the founder of the consulting firm SinoVise, which advises on geopolitical risks in business with China and teaches, among other things, at the University of New South Wales (Sydney).
Chongqing, a city home to ten million people, is also known as the “Furnace City” due to its location in the basin and the extreme heat that builds up in summer. With temperatures of over 40 degrees, extreme humidity and hardly any wind, citizens used to hide away in caves in the mountainous city to cool off. Today, they opt for air-conditioned subway stations.
You have to hand it to the CCP leadership: they don’t waste time. The Third Plenum ended just a week ago – and they are already getting to work. It has poured the equivalent of 400 billion euros into stimulating the economy, which has been limping along for months. But as gigantic as this package is, Xi Jinping has yet to implement urgently needed structural reforms, Finn Mayer-Kuckuk analyzes. The majority of the money is once again being channeled into state-owned enterprises.
Peter Hessler, former Beijing correspondent for The New Yorker, made a name for himself in 2001 with his book River Town. It describes life in rural China when it was still characterized by poverty and an underdeveloped economy. Almost twenty years later, he returns to the region and records his observations in what is now his fourth book on China. Fabian Peltsch spoke with the award-winning journalist and author about today’s youth, who instill hope for a more open China.
Shortly after the economic development strategy paper was published last Sunday, China’s government has already presented its first spending programs. It involves billions, primarily benefiting the idea of “high-quality development.”
The two measures are aimed at very different ends of the value chain. In the first case, the focus is on large industrial companies, and in the second case, on end customers, that is, ordinary citizens. The sum total of around 400 billion euros is very high. Such additional spending will certainly impact growth.
The consumption subsidies will be financed by new government bonds totaling one trillion yuan, which was already announced at the National People’s Congress in March. What is new is that the focus has now become clear.
Last week, the powerful Central Committee of the Chinese Communist Party deliberated on the continued promotion of the economy at its so-called Third Plenum. Party and government are largely identical in China. Party decisions are implemented without deviation and very quickly.
The 98 centrally managed state-owned enterprises are a logical place to start with initial economic control measures. These companies belong directly to the central government in Beijing. They are supervised by the State-owned Assets Supervision and Administration Commission of the State Council (SASAC).
The central state-owned enterprises are also seen as the “national team” of the Chinese economy. These include defense companies, shipyards, the nuclear industry, energy suppliers, oil producers and aircraft manufacturers.
If these large companies now go on a shopping spree for new machinery and equipment, German and European industries could also potentially benefit greatly. At a press conference in Beijing on Friday, SASAC head Liu Shaowei said that state-owned enterprises are to treat all types of suppliers equally when procuring.
If Liu holds his word, foreign companies will have the same opportunities as Chinese companies. According to him, the priority is to procure equipment of the highest quality at a reasonable price. However, economic policy is always shaped by domestic political constraints. Unemployment in China is high, so the temptation to prioritize domestic manufacturers is high.
The second stimulus program aimed at end consumers was far easier to understand on Friday. The property crisis and high youth unemployment keep consumption down. This has also been confirmed again by recent retail sales data from Shanghai.
The Japanese business newspaper Nikkei quoted a Chinese Ministry of Commerce representative explaining the reasons for the stimulus program: In addition to the current weak consumption, he cites the strong competition within China as a motivation. The oversupply of electric cars, among other things, has already resulted in overly cheap exports and sparked a trade conflict with the EU and other economies. The statement shows an awareness of the problem and a willingness to focus more on its own market when it comes to industrial output.
In your debut book, “Rivertown”, you described your life as a teacher in remote Sichuan in the 1990s. Now, you have returned to China to teach young students again, so your new book, “Other Rivers, is a sequel. Were you aware at the time that you would write such a follow-up decades later?
I had the idea that it would be interesting to return to these places and these people after about 20 years. Over the years, I’ve stayed in touch with my former students, visited them and written about them in magazines like The New Yorker. So, it made sense that I would do this book someday.
But you could not return to the same university in the city of Fuling. Why?
I had been in contact with the people in charge in Fuling since 2016 and they were interested. However, the political climate in Chongqing was difficult after the incident with Bo Xilai and the foreigners involved. Of course, I had nothing to do with it, but the city government didn’t want to take any risks. In the Chinese system, many things are not so much based on clear orders, but on fear. There is a general sense of nervousness. People try to take precautionary decisions to avoid getting into trouble. I wasn’t allowed to teach in Fuling, but I was allowed to teach in the neighboring province of Sichuan, which is very close by.
Your books were translated into Chinese and were also widely read there. Were people satisfied with the way you portrayed their lives?
‘River Town’ was not immediately translated into Chinese. I think if it had been, there would have been negative reactions, especially because of the way I described poverty. By the time the book was published in Chinese in 2012, people’s lives had changed so much that they looked back with nostalgia to that past time. It reminded them of what it was like when they were poor and the city was dirty and run-down. And it made them a little proud that they had got through it all. They were in the middle of this struggle to improve things and navigate through this new environment in China.
Did the younger students at Sichuan University know who you were?
I taught journalism there, and it was quite a challenge to get into my course. They knew who I was, and most of them had read things I had written. But I also had freshmen in introductory writing courses. Some of them, at least at the beginning of the course, had no idea who I was.
Some of the students were the same age as those back in Fuling. What differences and similarities did you notice?
They were immense, especially because almost all the students from Fuling came from the countryside: Over 90 percent of them came from farming families, who were generally quite poor. On the other hand, I did not have a single student from the countryside during my first semester at Sichuan University.
In one interview, you said that the students in Sichuan today seemed less childlike to you and instead more cynical or realistic.
The students in Fuling seemed very young. On the surface, they often looked like children, very simple, naive, looking at the world with wide eyes. However, my teacher colleague Adam and I had to keep reminding ourselves not to fall into this trap, because the truth was that many of them had been through very difficult things that we had never experienced or dealt with. They just didn’t have a lot of information. There was no internet connection back then. They had very little contact with people outside their region. Whereas at Sichuan University, the students were much more familiar with the system and knew how it worked. They were pretty smart. They were very practical and informed. Most use VPNs, virtual private networks, to bypass the Great Firewall.
Did you feel confirmed in the cliché that this generation of only children is spoiled?
It was actually quite the opposite. They had a very strong sense of responsibility. They felt this pressure because they were the center of the whole family. They were quite likable and modest. When I was teaching George Orwell’s Animal Farm, I asked the students which animals they identified with and they often chose very negative characters. They would choose the horse and say, I’m just like it. People can tell me lies, take advantage of me, and I’ll believe it. That was kind of sad, but also impressive in a way, because they just had no illusions. I think if you ask American teenagers, they tend to see themselves as the heroes, the ones who do everything right.
Are they less idealistic and hopeful about their future prospects than the students in Fuling?
There is a certain idealism, but it is very moderate. They are very modest in their expectations. When you talk to them about politics, some of those you get to know better often say: yes, democracy would be nice, but it’s not suitable for China. It won’t work here. But if we can have something that offers more freedom than what we have now, then we should have it. That’s the way they talk about the system.
But they also encountered Little Pinks, hardcore patriots …
There weren’t many of them in class. Or less than I would have expected. I brought up sensitive topics more than I did in Fuling. Teaching is an opportunity to give the students something they don’t get otherwise. I think that’s the point of foreign teachers. It wasn’t like I went in there and gave them a lecture on Xinjiang. Other topics are fine, for example, those related to the United States. And it’s important for them to get that perspective. I was able to do that in a way that wasn’t as threatening or awkward as I would have been in Fuling, in my 20s. I also knew I had a certain status as a writer, so I could probably get away with more.
You have also been attacked personally, and anonymously at that.
I still don’t know who did it. I know it came from a student newspaper that I commented on. But when it appeared on social media and on the Sichuan University notice board, my words were twisted into a fictional scene to make it seem like we had provoked a fight in the classroom, which never happened. The article was written by a quiet student named John. When I talked to him, I no longer believed he was a Little Pink. He felt bad. I don’t think he was responsible. The educated young Chinese are not as nationalistic as we believe. And it’s mainly an online thing, they create personalities there. In China, young people have few opportunities to express themselves.
Peter Hessler is known for his articles in The New Yorker and a book trilogy about China. He received a MacArthur Fellowship for “River Town” (2001), “Oracle Bones” (2006), and “Country Driving” (2010). After a stint in Cairo, Hessler returned to China in 2019 to teach at Sichuan University in Chengdu. His new book “Other Rivers” about this time was published by Penguin Random House in July 2024.
The Chinese Communist Party (CCP) concluded the Third Plenum of the 20th Central Committee last week. The Central Committee is one of the Party’s highest-ranking decision-making bodies and regularly meets in plenary sessions. Expectations were high in the run-up to the Plenum, and there was speculation about possible reform measures for the Chinese economy.
There are several reasons for the high expectations. In the past, Third Plenums were regular meetings during which economic reform measures were discussed. The historically high expectations are rooted in the Third Plenum of the 11th Central Committee, which decided in 1978 to embark on economic reforms in China after the end of the Mao era. Also, unlike the last major economic plenary session in 2013, no information was made public before this plenary session, leaving plenty of room for speculation.
The results of the past plenary session can be viewed from different perspectives. Firstly, it should be noted that Party conferences such as this one are high-level meetings that present policy initiatives at a comparatively abstract level. As such, we cannot expect concrete and detailed policy proposals where we already know the specific impact. Details will only emerge in many areas as specific initiatives and legislation are drafted.
In addition, we can look at the results and priorities of the plenary session from the perspective of the Party itself. To better understand these, the Party also publishes a statement by General Secretary Xi Jinping along with the official resolution. Based on this statement, we can identify several issues that the Party considers key.
First and foremost is the leadership role of the Party. In light of the numerous domestic and international challenges identified by the Party, it emphasizes its central claim to leadership, without which it believes China’s modernization is impossible. Anyone hoping for changes in the relationship between the Communist Party and the state or the party-state and economic actors will be disappointed by this resolution.
A second related aspect from the Party’s perspective is the balance between development and security. In the last few years, the relationship between economic development and securing the CCP’s rule has already shifted towards the latter goal. This Third Plenum has not changed this relationship. While economic development and growth remain important goals, safeguarding both internal and external security is equally central to the Party. Despite some reform announcements and promising further market opening in some areas, expectations should not be too high.
A third central point from the Party’s perspective is the emphasis on the role of innovation and “high-quality development.“ After the results of the National People’s Congress, China’s parliamentary equivalent, in March of this year, the focus on an innovation-driven economic model and the high-tech sector is unsurprising. The development of the “new productive forces,” which has been accelerated since then, is also reflected in this Central Committee resolution and clearly shows the direction in which the Communist Party intends to develop the Chinese economy over the coming years.
Apart from the Party’s perspective, we can also examine the results of the third plenary session from the perspective of international players. Regarding political risks for companies, we can highlight three main aspects.
Firstly, the development of a “high-level socialist market economy” needs to be mentioned. Although the Plenum’s resolution promises that “commitments to the public and non-public sectors should be honored,” it also clearly states the goal of investing state capital in sectors and key industries that strengthen national security and the Chinese economy. Despite the promise that a law that will “address core concerns of private companies” will be passed, the specifics are unclear at this stage. It is therefore unlikely that the Chinese economic model of state capitalism, as further focused on under Xi Jinping in recent years, will change fundamentally.
Closely related to this is the CCP’s plan to focus on an innovation-driven economic model. According to the Plenum resolution, this, too, is to be significantly advanced with state funds and in cooperation with state-owned companies. In light of the recent trade disputes with the European Union over electric vehicles, such conflicts can be expected to intensify going forward.
Finally, the resolution’s emphasis on securing supply chains should be mentioned. Like Western companies’ plans, the CCP also emphasizes the need to make supply chains more resilient, especially in the high-tech sector. This raises the possibility of future trade conflicts and potential market barriers, which companies should take into account in their political risk planning.
In conclusion, the high expectations in the Plenum have not materialized. Despite the proposed reform measures, there is no sign of a fundamental change of course, and factoring political risks into business decisions is more important than ever.
Dr. Carolin Kautz researches and teaches on Chinese politics and the Communist Party. She is the founder of the consulting firm SinoVise, which advises on geopolitical risks in business with China and teaches, among other things, at the University of New South Wales (Sydney).
Chongqing, a city home to ten million people, is also known as the “Furnace City” due to its location in the basin and the extreme heat that builds up in summer. With temperatures of over 40 degrees, extreme humidity and hardly any wind, citizens used to hide away in caves in the mountainous city to cool off. Today, they opt for air-conditioned subway stations.
