China’s third plenum shows its reform era has entered a new phase

The Communist Party’s long-awaited third plenum seems to not have grabbed the expected amount of attention, both inside and outside China. One of the explanations is that the plenum failed to meet expectations for significant reforms. In particular, there were no announcements of any concrete measures to boost China’s low domestic consumption levels – widely acknowledged as a major problem for the country’s economy.

However, the third plenum is not oriented towards solving short-term problems. The third plenums of past party congresses put forward long-term strategies. This most recent third plenum was no exception. One of its significant achievements is that it lays out a plan for China in 2035 regarding its economic system. The key is the new goal of implementing a “high-level socialist market economy”. Several aspects of this goal are particularly significant for China’s policy agenda.

First of all, it implies that the primary stage of socialism, a concept formally proposed in 1987 to describe China’s early stage of development, is reaching its endpoint. As that stage comes to a close, so are the institutional arrangements that characterised the first part of China’s reform era.