China's New Policy Blueprint: Tech-Driven Growth Amid Economic Challenges

China released a comprehensive 60-point policy document focused on boosting advanced industries while addressing economic challenges. Following a significant Communist Party meeting, the document emphasizes state-led innovation, new technologies, and fiscal reforms. Concerns include consumer demand, debt, and trade tensions, as analysts call for more practical strategies.

China unveiled a comprehensive 60-point policy document on Sunday, clarifying known objectives such as the development of advanced industries and an improved business environment. Analysts noted no impending structural changes in the world's second-largest economy.

The document follows a confidential Communist Party Central Committee meeting led by President Xi Jinping. Held from July 15-18, the meeting came at a critical time as China faces deflation risks, a prolonged property crisis, and surging debt. Trade tensions are also rising as global leaders increasingly scrutinize China's export dominance.

Some economists are urging Beijing to shift its focus towards boosting consumer demand, arguing that the current debt-fueled, investment-led model hampers long-term growth. However, the plenum reaffirmed China's commitment to scientific research and technological advancements, emphasizing 'new productive forces' aimed at industrial transformation and upgrading.

The policy targets strategic industries including artificial intelligence, new energy, and aerospace. Yet, uncertainties loom as analysts question whether this state-led economic model is sustainable. Alongside industrial goals, the document calls for fiscal and financial reforms to improve conditions for the private sector, enhance job opportunities, and address local government fiscal imbalances.

Historically, similar policy agendas have faced hurdles, such as the 2015 capital outflows scare that halted financial market liberalization. National security considerations have further tightened control over key economic sectors. As local governments grapple with significant debt, policymakers are expected to introduce measures to address fiscal imbalances, including changes to consumption tax allocation.

(With inputs from agencies.)