China’s economy isn’t out of the woods yet. More than ever, market reforms are needed
- Behind China’s recovery from Covid-19, growth has slowed in the past decade. Without realigning the roles of the state and market forces, China’s growth rate could continue to fall – especially if the US-China decoupling process persists

Key messages emerging from the meeting, as well as Xi’s Shenzhen speech and recent press briefings, have been a mix of past themes and some new twists: socialism with Chinese characteristics, “dual circulation” as a growth driver, supply-side reforms, achieving carbon neutrality, strengthening the financial system, opening up to foreign investment, enforcing the rule of law, and becoming more innovative and self-sufficient in technology.
While many of these programmes represent a continuation of ongoing policies, they take on a new urgency in today’s circumstances. Socialism with Chinese characteristics has been the overarching theme of China’s reform process for decades. Such lofty, ambiguous wording reconciles an implicit contradiction: the role of market forces in a state-driven economy.
The third plenum’s policy agenda that Xi endorsed in 2013 made the oft-cited distinction that markets would play a “decisive” role in the allocation of resources. But confusion has persisted because the same document emphasised that “public ownership” is at the “core” of the economic system.

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The government is likely to set lower and more flexible growth targets in the five-year plan. In response to tensions with Washington, Beijing has also changed tack: the party media has pronounced that the new “dual circulation” strategy is “a new development pattern in which domestic and foreign markets boost each other, with the domestic market as the mainstay”.
