“As a meeting crucial for China’s economy, the 20th Central Committee’s Third Plenary Session and its policy document marks a historic shift towards a new economic system. Covering all the issues currently of concern to society, the direction of reform will have significant impact of on foreign and domestic companies and individuals. 三中全会改革的方向涵盖了当前社会关注的所有问题，对国内外经济、企业和个人将产生以下重大影响 ”

图片来源：羊城晚报 云上岭南

How to accurately assess key signals of the economic trend in China Market? 如何看当前经济趋势

The 3rd plenary session of 20th Central Committee of the Communist Party of China (CPC) has been concluded with the release of a policy document. The document's publication on July 21, covers all the issues currently of concern to society, providing directional answers. It shows the top-level awareness of the recent economic downturn pressures and the hope for reversing expectations. As a programmatic document, the overall tone of the full text is "market-friendly and strictly managed." The Document outlines the general direction in terms of easing, market-friendliness, and deepening reforms, with specific measures to be gradually implemented after the Politburo meeting at the end of the month. 7月21日公布的20大三中全会《决定》的内容涵盖了当前社会关心的所有问题，提供了方向性的答案，显示出顶层对近期经济下行压力的充分意识和扭转预期的希望。作为纲领性文件，全文基调为“市场友好，严格管理”，《决定》在宽松、市场友好和深化改革部分给出了大方向，具体措施需待月底政治局会议后逐步落实。

China is facing multiple challenges, including economic slowdown, demographic changes, deepening real estate difficulties, intensifying trade tensions, and technological competition with the United States. This meeting is crucial for China's economy. Global investors are closely monitoring policy announcements on the new economic direction, particularly those concerning technological independence and consumption tax reform. 中国正面临经济放缓、人口结构变化、房地产困境加深、贸易紧张局势加剧以及与美国的技术竞争等多重挑战，此次会议对中国经济至关重要。全球投资者密切关注新经济方向的政策公告，特别是关于技术独立和消费税改革的内容。

It is noteworthy that the term "public ownership as the mainstay" does not appear in the Document, this historic change indicating a new economic system that equally protects various forms of ownership. The Document grants the private economy a more equal status and protection. It emphasizes that comprehensive deepening of reforms is an unavoidable trend of the times. Despite many challenges, the goal is the common development of all forms of ownership, with all reform tasks to be completed by 2029. 值得关注的是，此次在《决定》中没有出现“公有制为主体”的表述，这一历史性变化显示出新的经济制度平等，对各种所有制经济的保护。新的《决定》赋予民营经济更平等的地位和保护。强调全面深化改革是不可回避的时代洪流，尽管困难重重，但目标是各种所有制经济共同发展，并要求在2029年前完成所有改革任务。

The direction of reform is tightening in terms of financial and tax, the emphasis is on financial support for social security and innovation, expanding the tax base, and clearly proposing property and consumption taxes. The meeting highlighted "ecological civilization" and carbon reduction as key features of advancing Chinese modernization, indicating a commitment to promoting clean technology, expanding foreign trade relations, and fostering green growth and addressing climate change. 在金融和税收方面，改革的方向趋紧，强调金融支持社会保障及创新，税改扩大税基，房地产税和消费税也被明确提出。会议强调了将 “生态文明”和碳减排作为现代化的关键特征，表明了旨在推动清洁技术和扩大对外贸易关系及促进绿色增长和应对气候变化的承诺。

Enhancing Market Confidence: The "Document" supports the market economy and private sector, which helps boost the confidence of foreign companies in the Chinese market, encouraging them to continue investing and operating. The stability and friendliness of the policies are expected to bring more business opportunities, promote fairer and more transparent market competition, enhance legal protections, and improve the business environment. 增强市场信心：《决定》支持市场经济和民营经济有助增强跨国公司和外企对中国市场的信心，鼓励其继续投资和运营。政策的稳定性和友好性有望带来更多商业机会，更加公平透明的市场竞争、增强的法律保护，并改善营商环境。

The Impact of Tax Reform:expanding the tax base and enhancing social equity, including incorporating various non-labor income into total income for comprehensive tax rate calculation. For foreign enterprises, this may mean needing to adapt to new tax policies, reassess their tax planning and financial management strategies, and ensure compliance while optimizing tax costs. 税收改革影响：扩大税基和提升社会公平，包括将各种非劳动性收入计入总收入，综合税率计算。对于外企来说，这可能意味着需要适应新的税收政策，重新评估其税务规划和财务管理策略，确保合规的同时优化税务成本。

Financial Policy Adjustments: While the overall tone emphasizes financial services for the real economy, specific measures may affect financing channels and costs for foreign companies. The tightening trend of financial reforms may require multinational companies to pay more attention to risk management and liquidity. 金融政策调整：虽然总基调是金融服务实体经济，但具体措施可能会影响跨国公司和外企的融资渠道和成本。金融改革的方向趋紧可能使跨国公司需要更加注重风险管理和资金流动性。

The IMF July 2024 World Economic Outlook Update report forecasts that the global economy will grow by 3.0% in 2024. Due to geopolitical tensions and ongoing supply chain disruptions, growth in advanced economies is expected to slow to 1.5%, impacted by tighter financial conditions and lower consumer spending. In contrast, emerging markets and developing economies, driven primarily by strong domestic demand and a rebound in commodity prices, are expected to grow by 4.5%. China, at 5%, still has investment potential. 国际货币基金组织IMF 2024年7月《世界经济展望更新》报告预计2024年全球经济将增长3.0%。由于地缘政治紧张局势和持续的供应链中断，受更紧的金融条件和较低的消费者支出影响，预计发达经济体的增长将放缓至1.5%，新兴市场和发展中经济体主要由强劲的国内需求和商品价格回升推动，预计将增长4.5%。中国为5%，仍具有投资潜力。

Despite challenges, Germany's direct investment in China reached a record €11.9 billion in 2023. German companies have adopted a "For China, In China" strategy to address local competition and supply chain risks. Overall, the 20th Central Committee's Third Plenary Session and its "Policy Document" bring new opportunities and challenges for foreign companies. In the short term, the implementation of new policies and monetary policy adjustments may create uncertainties; in the long term, these policies will aid strategic planning in China. It's important fro Foreign companies   to closely monitor policy changes and market reactions, strengthen international coordination to flexibly address these challenges, and seize market opportunities to achieve transformation and profitability. 尽管面临挑战，2023年德国在中国的直接投资创纪录地达到了119亿欧元。德国企业采取“为中国，在中国”的战略，以应对本地竞争和供应链风险。总体而言，20大三中全会及其《决定》将为跨国公司和外企带来新的机遇和挑战。短期来看，新政策落实和货币政策微调可能带来不确定性，长期来看，这些政策有助于在华的战略规划。跨国公司需要密切关注政策变化和市场反应，加强国际布局协调以灵活应对这些挑战，抓住市场机会实现企业变革和盈利。

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