Chinese security monitors a checkpoint as the Communist Party’s Central Committee holds its third plenum meeting in Beijing, China, on July 15, 2024.
| Photo Credit: AP

China posted lower than expected growth in the second quarter on July 15, with all eyes on how top officials gathering for a key meeting in Beijing might seek to tackle the country’s deepening economic malaise.

The world’s second-largest economy is grappling with a real estate debt crisis, weakening consumption, and an ageing population.

Trade tensions with the United States and the European Union, which have sought to limit Beijing’s access to sensitive technology as well as putting up tariffs to protect their markets from cheap, subsidised Chinese goods, are also dragging growth down.

And on Monday, official statistics showed the economy grew by only 4.7% in the second quarter of the year. It represents the slowest rate of expansion since early 2023, when China was emerging from a crippling zero-COVID policy that strangled growth. Analysts polled by Bloomberg had expected 5.1%.

Retail sales — a key gauge of consumption — rose just two percent in June, down from 3.7% growth in May. “The external environment is intertwined and complex,” the National Bureau of Statistics said.

“Domestic effective demand remains insufficient and the foundation for sound economic recovery and growth still needs to be strengthened,” it added.

Party is planning “major” reforms: Xi

The figures came the same day that China’s ruling Communist Party kicked off a key meeting led by President Xi Jinping focussed on the economy, known as the ‘Third Plenum.’

The Chinese leader delivered a “work report” at the opening of the meeting, state news agency Xinhua said. He also “expounded on a draft decision of the CPC Central Committee on further comprehensively deepening reform and advancing Chinese modernisation”, it added. Beijing has offered few hints about what might be on the table.

Mr. Xi has said the party is planning “major” reforms. Analysts are hoping those pledges will result in badly needed support for the economy. “The four-day meeting of the country’s top governing body couldn’t come soon enough,” Harry Murphy Cruise, an economist at Moody’s Analytics, said in a note. But, he said, “while the case for reform is high, it’s unlikely to be a particularly exciting affair”.

“Instead, we expect a modest policy tweak that expands high-tech manufacturing and delivers a sprinkling of support to housing and households,” he added.

Meeting intended to long-term ideas and structural reforms

The People’s Daily, the Communist Party’s official newspaper, appeared to confirm lower expectations when it warned last week that “reform is not about changing direction and transformation is not about changing colour”.

Ting Lu, chief China economist at Nomura, said the meeting was “intended to generate and discuss big, long-term ideas and structural reforms instead of making short-term policy adjustments”.

The Third Plenum has previously been an occasion for the party’s top leadership to unveil major economic policy shifts.

In 1978, then-leader Deng Xiaoping used the meeting to announce market reforms that would put China on the path to dazzling economic growth by opening it to the world.

And more recently following the closed-door meeting in 2013, the leadership pledged to give the free market a “decisive” role in resource allocation, as well as other sweeping changes to economic and social policy.

Beijing aims for five percent growth this year

Beijing has said it is aiming for five percent growth this year — enviable for many Western countries but a far cry from the double-digit expansion that for years drove the Chinese economy.

But the economic uncertainty is also fuelling a vicious cycle that has kept consumption stubbornly low.

Among the most urgent issues facing the economy is the beleaguered property sector, which long served as a key engine for growth but is now mired in debt, with several top firms facing liquidation.

Authorities have moved in recent months to ease pressure on developers and restore confidence, including by encouraging local governments to buy up unsold homes.

Analysts say much more is required for a full rebound, as the country’s economy has yet to bounce back more than 18 months after damaging COVID-19 restrictions ended.

U.S. President Joe Biden and Chinese President Xi Jinping discussed Taiwan, artificial intelligence and security issues on Tuesday in a call meant to demonstrate a return to regular leader-to-leader dialogue between the two powers.

The call, described by the White House as “candid and constructive,” was the leaders’ first conversation since their November summit in California produced renewed ties between the two nations’ militaries and a promise of enhanced cooperation on stemming the flow of deadly fentanyl and its precursors from China.

Also read | China tells U.S. will ‘never compromise’ on Taiwan

Mr. Xi told Mr. Biden that the two countries should adhere to the bottom line of “no clash, no confrontation” as one of the principles for this year.

“We should prioritize stability, not provoke troubles, not cross lines but maintain the overall stability of China-U.S. relations,” Mr. Xi said, according to China Central Television, the state broadcaster.

The roughly 105 minute call kicks off several weeks of high-level engagements between the two countries, with Treasury Secretary Janet Yellen set to travel to China on Thursday and Secretary of State Antony Blinken to follow in the weeks ahead.

Mr. Biden has pressed for sustained interactions at all levels of government, believing it is key to keeping competition between the two massive economies and nuclear-armed powers from escalating to direct conflict. While in-person summits take place perhaps once a year, officials said, both Washington and Beijing recognise the value of more frequent engagements between the leaders.

The two leaders discussed Taiwan ahead of next month’s inauguration of Lai Ching-te, the island’s President-elect, who has vowed to safeguard its de-facto independence from China and further align it with other democracies. Mr. Biden reaffirmed the United States’ longstanding “One China” policy and reiterated that the U.S. opposes any coercive means to bring Taiwan under Beijing’s control. China considers Taiwan a domestic matter and has vigorously protested U.S. support for the island.

Taiwan remains the “first red line not to be crossed,” Mr. Xi told Mr. Biden, and emphasised that Beijing will not tolerate separatist activities by Taiwan’s independence forces as well as “exterior indulgence and support,” which alluded to Washington’s support for the island.

Mr. Biden also raised concerns about China’s operations in the South China Sea, including efforts last month to impede the Philippines, which the U.S. is treaty-obligated to defend, from resupplying its forces on the disputed Second Thomas Shoal.

Next week, Mr. Biden will host Philippines President Ferdinand Marcos Jr. and Japanese Prime Minister Fumio Kishida at the White House for a joint summit where China’s influence in the region was set to be top of the agenda.

Mr. Biden, in the call with Mr. Xi, pressed China to do more to meet its commitments to halt the flow of illegal narcotics and to schedule additional precursor chemicals to prevent their export. The pledge was made at the leaders’ summit held in Woodside, California, last year on the margins of the Asia-Pacific Economic Cooperation meeting.

At the November summit, Biden and Xi also agreed that their governments would hold formal talks on the promises and risks of advanced artificial intelligence, which are set to take place in the coming weeks. The pair touched on the issue on Tuesday just two weeks after China and the U.S. joined more than 120 other nations in backing a resolution at the United Nations calling for global safeguards around the emerging technology.

Mr. Biden, in the call, reinforced warnings to Mr. Xi against interfering in the 2024 elections in the U.S. as well as against continued malicious cyberattacks against critical American infrastructure.

He also raised concerns about human rights in China, including Hong Kong’s new restrictive national security law and its treatment of minority groups, and he raised the plight of Americans detained in or barred from leaving China.

The Democratic president also pressed China over its defense relationship with Russia, which is seeking to rebuild its industrial base as it presses forward with its invasion of Ukraine. And he called on Beijing to wield its influence over North Korea to rein in the isolated and erratic nuclear power.

As the leaders of the world’s two largest economies, Mr. Biden also raised concerns over China’s “unfair economic practices,” National Security Council spokesman John Kirby said, and reasserted that the U.S. would take steps to preserve its security and economic interests, including by continuing to limit the transfer of some advanced technology to China.

Mr. Xi complained that the U.S. has taken more measures to suppress China’s economy, trade and technology in the past several months and that the list of sanctioned Chinese companies has become ever longer, which is “not de-risking but creating risks,” according to the broadcaster.

Yun Sun, director of the China program at Stimson Center, said the call “does reflect the mutual desire to keep the relationship stable” while the men reiterated their longstanding positions on issues of concern.

The call came ahead of Yellen’s visit to Guangzhou and Beijing for a week of bilateral meetings on the subject with finance leaders from the world’s second largest economy — including Vice Premier He Lifeng, Chinese Central Bank Gov. Pan Gongsheng, former Vice Premier Liu He, American businesses and local leaders.

An advisory for the upcoming trip states that Ms. Yellen “will advocate for American workers and businesses to ensure they are treated fairly, including by pressing Chinese counterparts on unfair trade practices.”

It follows Mr. Xi’s meeting in Beijing with U.S. business leaders last week, when he emphasized the mutually beneficial economic ties between the two countries and urged people-to-people exchange to maintain the relationship.

Mr. Xi told the Americans that the two countries have stayed communicative and “made progress” on issues such as trade, anti-narcotics and climate change since he met with Mr. Biden in November. Last week’s high-profile meeting was seen as Beijing’s effort to stabilize bilateral relations.

Ahead of her trip to China, Ms. Yellen last week said that Beijing is flooding the market with green energy that “distorts global prices.” She said she intends to share her beliefs with her counterparts that Beijing’s increased production of solar energy, electric vehicles and lithium-ion batteries poses risks to productivity and growth to the global economy.

U.S. lawmakers’ renewed angst over Chinese ownership of the popular social media app TikTok has generated new legislation that would ban TikTok if its China-based owner ByteDance doesn’t sell its stakes in the platform within six months of the bill’s enactment.

As chair of the Committee on Foreign Investment in the U.S., which reviews foreign ownership of firms in the U.S., Ms. Yellen has ample leeway to determine how the company could remain operating in the U.S.

Meanwhile, China’s leaders have set a goal of 5% economic growth this year despite a slowdown exacerbated by troubles in the property sector and the lingering effects of strict anti-virus measures during the COVID-19 pandemic that disrupted travel, logistics, manufacturing and other industries.

China is the dominant player in batteries for electric vehicles and has a rapidly expanding auto industry that could challenge the world’s established carmakers as it goes global.

The U.S. last year outlined plans to limit EV buyers from claiming tax credits if they purchase cars containing battery materials from China and other countries that are considered hostile to the United States. Separately, the Department of Commerce launched an investigation into the potential national security risks posed by Chinese car exports to the U.S.

This handout photo released by Sri Lankan Prime Minister’s Office on March 27, 2024 shows Sri Lanka’s PM Dinesh Gunawardena (left) with Chinese President Xi Jinping, before a meeting in Beijing.
| Photo Credit: AFP

China has said it would continue to support Sri Lanka, as the crisis-hit island nation’s Prime Minister on March 30 wrapped up a visit to Beijing to try to finalise a debt restructuring deal.

Prime Minister Dinesh Gunawardena arrived in China on Monday for a visit that included meeting President Xi Jinping and an appearance at the Boao Forum, a high-profile international meeting.

Sri Lanka’s years-long economic crisis was high on the agenda during Mr. Gunawardena’s trip, with China accounting for around 10% of the South Asian country’s total foreign debt.

China is willing to “continue supporting its financial institutions to actively negotiate with Sri Lanka, maintain friendly communication with other creditors, play a positive role in the International Monetary Fund, assist Sri Lanka in financial relief,” Beijing’s Foreign Ministry said in the Chinese version of a joint bilateral statement released on March 29.

The two sides agreed to “make every effort to promote the Port City Colombo and Hambantota Development Project, turning them into flagship projects of the Sino-Sri Lankan joint construction of the ‘Belt and Road'”, the statement said, referring to Xi’s massive Belt and Road global infrastructure initiative.

The southern sea port of Hambantota was considered among the white-elephant projects launched by former president Mahinda Rajapaksa, who ruled the country for a decade until 2015.

Rajapaksa borrowed heavily from China for projects that many criticised as a debt trap that led to the worst economic crisis in Sri Lanka’s history. Unable to repay a huge loan taken from China in 2017 to build Hambantota port, Sri Lanka handed it over to the state-owned China Merchants Group for $1.12 billion on a 99-year lease.

Sri Lanka defaulted on its $46 billion external debt in April 2022 after it ran out of foreign exchange to finance even essential imports such as food, fuel and medicine. It secured a $2.9 billion International Monetary Fund (IMF) bailout last year, with the programme conditional on a debt deal that satisfies foreign creditors.

China had agreed “in principle” to restructure Sri Lanka’s debt in December, but neither Colombo nor Beijing had given details and the two are yet to finalise an agreement. Sri Lanka’s government said in January that a foreign debt restructure would be finalised by the beginning of April.

Australian Prime Minister Anthony Albanese. File
| Photo Credit: AP

Prime Minister Anthony Albanese said on November 1 he will raise the plight of a detained democracy blogger with Chinese leaders during a state visit to China.

Mr. Albanese said he had approved a draft letter to the sons of Yang Hengjun, who has been detained in China since 2019.

“We’re very sympathetic and understand the concerns that they would have for their father and for this Australian who has been detained now for a long period of time,” Mr. Albanese told reporters.

The sons have made public a letter to Mr. Albanese, dated October 28, that said there was a “narrow window of opportunity” before Mr. Albanese left for China to secure their father’s freedom.

“We ask that you make it clear that it is not possible to stabilise the bilateral relationship with a government that is holding an Australian citizen just a few kilometres south of where you will be hosted,” the brothers added, referring to Beijing.

They said they had just last week received the first letter Yang had been allowed to send from detention. Yang wrote: “I’m sick, I’m weak, I’m dying.” Yang, who once worked for China’s Ministry of State Security, is still awaiting a verdict from his closed-door trial on espionage charges in May 2021.

His sons are 24 and 31 years old. Family friend Feng Chongyi said the sons had not been publicly identified because they feared Chinese retaliation for their father’s activities. Feng said Mr. Albanese becoming the first Australian Prime Minister in seven years to visit China created an opportunity for Yang.

“It’s not the last chance, but it’s the best chance,” Feng said. “The visit symbolises the complete normalisation of relations between the two countries.” Mr. Albanese’s visit that begins on Saturday is a sign that bilateral relations have improved since his centre-left government was elected last year following nine years of conservative rule.

Mr. Albanese will meet with President Xi Jinping and Premier Li Qiang in Beijing and attend the China International Import Expo in Shanghai during the three-day visit.

Mr. Albanese raised the plights of Yang and another detained Australian, journalist Cheng Lei, in his first meeting with Xi on the sidelines of a Group of 20 summit in Indonesia a year ago. Cheng was deported last month in what many saw as Beijing clearing the way for Mr. Albanese’s visit.

Yang’s sons wrote that said they had been “inspired by the wonderful news” of Cheng’s release. They hoped Australian authorities could “achieve a second miracle by saving our father”. Asked about Cheng’s case, Mr. Albanese told reporters: “Every case is … different.”

An expected meeting between Xi Jinping and Joe Biden would not be smooth-sailing said China’s Foreign Minister. File
| Photo Credit: AP

China’s Foreign Minister considers that the road to an expected meeting between President Xi Jinping and U.S. President Joe Biden would not be “smooth-sailing” and that both sides must work together to achieve results, the Foreign Ministry said on Sunday.

Wang Yi met with Mr. Biden, as well as Secretary of State Antony Blinken and National Security Advisor Jake Sullivan, during a three-day visit to Washington. Both sides agreed to work toward a bilateral meeting at the upcoming Asia-Pacific Economic Cooperation forum summit in San Francisco in November.

In a statement released by China’s Foreign Ministry summarising the discussions with members of the “U.S. strategic community,” Mr. Wang said that the road to the bilateral meeting would not be “smooth sailing” and that they could not rely on “autopilot” to make it happen.

Mr. Wang’s three-day visit to Washington came at a time when tensions between the two countries remain high, including over U.S. export controls on advanced technology and China’s more assertive actions in the East and South China seas.

The statement said that although there are still many issues to be resolved, both sides believe that it is both beneficial and necessary for the U.S. and China to maintain dialogue.

The meeting is the latest in a series of high-level contacts between the two countries as they explore the possibility of stabilising an increasingly tense relationship at a time of conflict in Ukraine and Israel.

According to the Foreign Ministry statement, Mr. Wang also said that China and the U.S. needed a “return to Bali,” in a reference to Mr. Xi and Mr. Biden’s previous meeting at a G-20 summit last year, where both officials discussed issues relating to Taiwan, U.S.-China trade tensions as well as cooperation to address issues like climate change, health and food security.

Mr. Wang said that the two countries must “eliminate interference, overcome obstacles, enhance consensus and accumulate results.”

Other issues discussed between Mr. Wang and Mr. Biden included military exchanges between the U.S. and China, as well as financial, technological and cultural exchanges and cooperation, as well as the crises in West Asia and Ukraine.

China’s Ministry of Foreign Affairs, on Monday, announced that Chinese Premier Li Qiang will attend the 18th G20 Summit in New Delhi, instead of President Xi Jinping. The ministry released an official statement on its website.

Here are 5 facts about Chinese Premier Li Qiang