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At the Association of Southeast Asian Nations (ASEAN) summit in Malaysia this weekend, delegations led by the US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng met for trade talks over two days.
The meeting was scheduled last week after some hiccups, with Bessent recently criticising Chinese negotiators and China claiming the US was stoking panic over its export controls on rare earth minerals. We detailed those issues in our tracker last week. Positive signals matter for the upcoming in-person meeting between US President Donald Trump and Chinese President Xi Jinping, which will be the first since Trump came to power in January.
Domestically, China saw an important meeting from Monday (October 20) to Thursday, known as the Fourth Plenum, held to decide the next Five-Year Plan (2026 to 2030). Details will not be out immediately, but official sources gave an idea about the broad priorities: “building a modernized industrial system and reinforcing the foundations of the real economy”, and “greater self-reliance and strength in science and technology.”
Finally, GDP numbers for Q3 (July to September) came out last Monday as well, alongside data on industrial growth, investment, consumption, and more.
Here is a closer look at these developments:
Bessent said after the talks, “I would describe [the negotiations] as constructive, far-reaching, in-depth and giving us the ability to move forward and set the stage for the leaders’ meeting in a very positive framework.” The Financial Times also reported him saying that the issue of Chinese purchases of US agricultural goods was discussed.
Chinese state media agency Xinhua said a “basic consensus” had been reached on some contentious issues, including extending the suspension of reciprocal tariffs.
UPSHOT: Trump and Xi will meet during the Asia-Pacific Economic Cooperation (APEC) in South Korea on Thursday, after months of trade tensions. There is a long list of issues that are pending resolution, not limited to the US wanting China to purchase soybeans from its farmers and securing access to the rare earth minerals’ supply (which China dominates).
For China, a negotiation could lead to increased access to US technology and markets. But, as Reuters reported, similar issues of agriculture and trade were on the table in 2020, around the time that the US launched its first tariff war under Trump. To reduce the trade deficit, China was to increase purchases of US goods and services by $200 billion annually, for at least two years, but the Covid-19 pandemic derailed it.
In fact, the US Trade Representative’s office last week launched a tariff investigation into China’s “apparent failure” to comply with the “Phase One” trade deal signed in 2020, which China has criticised. Thus, even as Xinhua said that both sides will “promote the healthy, stable and sustainable development of economic and trade relations” under the “strategic guidance of the two heads of state”, many complexities would have to be dealt with.
In the Chinese political system, the Central Committee of the Chinese Communist Party (CCP) comprises key members of a party with over 100 million members throughout the country. This committee meets for annual plenary meetings for policy discussions on a range of topics, such as the economy or governance.
This time, the focus was on the next five-year plan. Originally a feature of the Soviet Union, where the state had total control over economic resources, they were aimed at allocating resources and priorities to sectors of the economy. A report in Xinhua said, “First introduced in 1953, China has had 14 five-year plans. Following the launch of (economic) reform and opening up in 1978, the country began developing a socialist market economy system, yet it did not abandon the planned approach.”
UPSHOT: This year’s plenum was attended by 168 of the more than 200 full members, which was one of the lowest-ever attendances at the event. It also saw an unusual announcement where a senior military leader in the Central Military Commission (CMC) was replaced, on the heels of recent corruption-related purges. We wrote about the context and possible motives for this recently.
Apart from industrialisation and scientific development, an interesting announcement was that “Focusing on the services sector, efforts will be made to expand market access and areas of openness from 2026 to 2030… The country will expand pilot programs to open up its value-added telecommunication, biotechnology and wholly foreign-owned hospitals, while increasing the openness of the education and culture sectors in an orderly manner.” It signals that China looks to the rest of the world not just as an export market but also as a source of investments for its economic growth.
Official data published for the third quarter (July to September) showed a GDP growth rate of 4.8%. This was a period when tariff truces were in effect, but there was a lot of uncertainty in terms of the global climate on trade. As the manufacturing hub of the world, Chinese manufacturers had a lot to lose from this.
UPSHOT: On the face of it, this seems like a good number for an economy the size of China; however, it shows slowing growth, not just compared to the 8.3% to 14% annual rates lodged in the 2000s, but also in recent years. We spoke to an analyst of the Chinese economy for a detailed analysis of the latest numbers, and wrote about these issues in the context of China’s demographic shifts.
Terms such as “involution” — excess production amid low demand, which in turn fuels companies to reduce prices of goods to an unhealthy level — have gained currency in the last few years. But, slowing manufacturing will also lead to challenges in the form of unemployment and loss of income, posing a real challenge for policymakers.
