Plenums serve as core legislative meetings of each Party Congress, providing Party officials a platform to set China’s key policy priorities. Interpreting the Fourth Plenum – which concluded in Beijing yesterday – is essential to protecting business interests and anticipating new regulatory trends. The eagerly awaited meeting stressed the need to strengthen Party leadership and control at all levels, as a means of addressing China’s economic, political and social challenges. Here is North Head’s quick take on what this might mean for businesses operating in China.
 
Key messages from the Fourth Plenum reiterated the core thinking of China’s leaders: Party leadership is the key to managing the risks that China faces both at home and abroad. Some key insights include:

  • “Persisting in and improving Party leadership” took top billing, reinforcing trends of increasing Party supervision at all levels of governance.
  • Increasing Party supervision will be relied upon to address sluggish economic growth, with Party-guided aims pushing for growth in consumption-oriented sectors.
  • Under Party leadership, SOEs and state-led growth will guide economic priorities, encouraging private enterprise growth through streamlining incentives.

 While there were no dramatic announcements of shifts in policy direction or personnel changes, the meeting underscored political developments that will affect companies in China. Here are a few things to watch for your business operations:

  • The focus on political discipline to mitigate risks suggests that authorities will continue to pursue the mission to manage financial and ecological challenges, even if that means accepting lower economic growth.
  • As such it is unlikely that dramatic stimulus measures will be used to rescue the economy. Environmental policies will also continue to be rolled out and enforced.
  • SOEs will continue to serve as a key vehicle in guiding economic growth, setting trends and expectations for the private sector.
  • Companies will need to acknowledge and react to the mounting pressures on local government officials to both adhere to the Party line, and hit their targets.
  • The Party will continue to be sensitive to perceived slights to national sovereignty, increasing the need to remain cautious and sensitive in all marketing and PR materials that refer to geographical areas.
  • Rule of law: the Fourth Plenum sent another clear message – strict governance should be expected in all Chinese territories and Special Administrative Regions, including Hong Kong. For businesses with key operations in Hong Kong, this statement means that Party control should be expected to ramp up, not down in the coming months.
  • The focus on using technology for “social governance” indicates that the trend of increasing data requirements for companies will continue, and new administrative processes may be on the horizon.

 North Head can be your resource for a deeper dive into these issues, with customized intelligence on impact of Fourth Plenum on your business. Assessment of the Fourth Plenum will be combined with a broader view of China’s changing political and economic landscape to provide analysis of the issues that matter to your company.