Beijing will probably hold an important meeting in the coming weeks—the Fourth Plenum of the 19th Party Congress—which will map out key policy priorities for the next five years, from 2018 to 2022. The meeting is being held at a sensitive time for China’s economy, as the deleveraging campaign is slowing growth while exports are under pressure from protectionism.
As this year marks the 40th anniversary of Deng Xiaoping’s landmark “reform and opening,” Beijing faces a stark choice between continuing reforms or starting to close the door on the global economy. Despite recent remarks from Xi Jinping on the importance of “self-reliance,” we expect the Chinese government to emphasize continued reform along with the deleveraging campaign to reduce systemic financial risks, while also embracing some counter-cyclical policy to support the economy against threats from a trade war.
