China's top leaders, including President Xi Jinping, are holding a high-profile gathering in Beijing this week for the Third Plenum of the Communist Party. The event is expected to offer clues on Beijing's direction regarding markets and the economy as China grapples with a property sector crisis, high local government debt, and weak consumer sentiment.
Investors will be closely watching for targeted efforts to address structural economic issues and social problems, as well as enhance China's technological self-reliance amid US restrictions on access to technology. The meeting comes after months of unexplained delay and follows a sharp slowdown in economic growth during the April to June months.
Historically, Third Plenums have been a platform for the Communist Party's leadership to announce key economic reforms and policy directives. However, expectations for big changes are modest as China faces significant challenges both domestically and internationally.
The gathering is taking place away from the public eye in Beijing, with Mr. Xi presiding over the meeting at an undisclosed location. The party officials in attendance will consider a draft proposal on 'further comprehensively deepening reform.'
China's businesses and consumers have suffered from stumbling growth, a property sector meltdown, and blight of debt among local governments. The success or failure of the meeting will largely turn on whether Mr. Xi is able to win renewed confidence from the Chinese population and foreign investors who have grown disenchanted with his policies.
The Third Plenum is an opportunity for China to show its cards and address the uncertainty that feeds into low consumer and investor sentiment.
