Advanced Manufacturing to be a Focus of China’s July Party Plenum

China’s long-delayed third Party plenum on economic reform will be held in July. Official commentary suggests that the Party communique which will be issued at this meeting will double-down on the importance of manufacturing as a tool to address China’s pressing domestic economic problems, potentially increasing trade tensions with a range of foreign countries.

On April 30, Chinese authorities announced that the third Party plenum of the Chinese Communist Party’s Central Committee would meet in July. Official commentary indicates that economic issues will be the core of the plenum, including a focus on integrated economic plans for the Yangtze Delta region. But specific attention will also be devoted to fostering “new quality productive forces”—a new Party slogan set out by Xi Jinping—with state commentary stating:

“The imperative was stressed... to develop new quality productive forces according to local conditions. The layout of China's strength in strategic science and technology should be improved, emerging industries cultivated and strengthened, the development of industries for the future arranged in advance, and the transformation and upgrading of traditional industries empowered by advanced technologies.”

As Chinese authorities note, “new quality productive forces” includes three specific industries: electric vehicles, lithium-ion batteries, and photovoltaic products, which have registered dramatic export growth, in addition to other fields in biomedicine, artificial intelligence, and the digital economy. In recent years, Beijing has identified and promoted key advanced manufacturing industries—including electric vehicles and batteries—as part of China’s industrial strategy. Goals include reducing reliance on foreign technologies and creating new sources of export-driven growth. 

For Beijing, such emphasis on manufacturing represents an economic development strategy aimed at responding to serious domestic challenges. China currently faces both continuing high youth unemployment, as well as construction and real estate sectors that are mired in deep distress after the implosion of China’s property bubble, and which constituted a quarter of China’s GDP prior to the pandemic. Recent years have seen Chinese authorities make a concerted effort to raise the status of vocational education programs and steer youth in the direction of skilled manufacturing labor, precisely because of the employment difficulties facing four-year college graduates. 

Indeed, recent statements by Xi himself give further support to the likelihood that the July plenum will feature a doubling-down on manufacturing. A front-page article in the Party’s flagship paper accompanying the announcement of the July plenum carried extensive quotations from Xi himself extolling Chinese “craftsmanship” (gongjiang) in numerous fields of advanced manufacturing.

Naturally, any policy moves by Beijing to boost its own export-oriented advanced manufacturing industries run the risk of heightening tensions between China and its trading partners. Fears of Chinese market domination in specific industries led the Biden administration to announce high tariffs on a range of such products last week. In fall 2023, European authorities launched an anti-subsidy investigation into China’s electric vehicle industry, and are currently considering imposing countervailing duties.