Why can't China turn its economy around?

China's economy is stumbling, again. Slower-than-expected second-quarter growth statistics are putting "further pressure on the Communist Party" as its leaders gathered this week to plan the way forward, said The New York Times. Those leaders have tried to offset the country's longstanding real estate slump with a boost to export-driven manufacturing, but that has led to a "glut of goods, from chemicals to cars" and a backlash — in the form of tariffs — from countries whose leaders "fear the flood of Chinese goods will overwhelm local industries." The result? China is "limping along precariously," said one analyst.

"Since late 2022, China's policymakers have introduced a slew of measures to try to revive the market," said The Wall Street Journal. It's not working. And "expectations are low" that this week's meeting — known as the "Third Plenum" — will offer a "significant course correction" to start truly turning the Chinese economy around. Instead, it's expected that President Xi Jinping will double down on his manufacturing-centric export strategy while neglecting efforts to boost spending by Chinese consumers at home. Economists are skeptical that would produce anything but a new round of trade wars. "The Chinese economy is foundering," said Cornell University's Eswar Prasad.

What did the commentators say?

The Third Plenum is intended to be about "long-term reform not short-term stimulus," said The Economist. In fact, the two aren't so easy to distinguish. One long-term problem: Consumer spending is "chronically weak in China." That's partly due to a "thin social safety net" that forces China's poorest households to scrimp and save instead of spend. Communist leaders could help goose that spending with a series of reforms, including "fatter state pensions and improved health care." To fix the economy now, though, any long-term reform must be accompanied "with further stimulus spending in the short term." 

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"China must recognize that its fundamental recipe for success has not changed," the University of Hong Kong's Brian Y. S. Wong said in The South China Morning Post. In the post-Mao era, China exploded from a poor nation into the world's second-largest economy by opening its doors to the world. A burgeoning "Cold War II" between China and the West has recently shifted the focus to "intense strategic rivalries." The best thing to do now is make China newly welcoming to foreigners, "whether they are tourists, students or skilled labor." That open-door policy will be one of the "integral elements" of China's future economic success.

What next?

The low expectations were correct. Chinese leaders pledged to "better manage" the country's economy on Thursday, said Nikkei Asia. But there were "no clear bombshells and few details" about the plans or reforms going forward. "There's nothing hinting at China heading towards a different policy direction," said one analyst. What clues that emerged didn't hint at a new opening to the world, said The Associated Press. Instead, the Third Plenum issued a statement saying "national security is an important foundation for the steady and long-term development of Chinese-style modernization.”

The idea that China might overtake the U.S. as the world's largest economy "has been a fixation for policymakers and economists for decades," said Deutsche Welle. Now there's a new question: "Has China's economy peaked?" The country is burdened with a "heavy debt load, slowing productivity, low consumption and an aging population" and faces increasing tensions with the West. There's a possibility that "China's impending economic supremacy may be delayed, or never happen."