On 30 July, the 21-member Politburo of the Chinese Communist Party (CCP) met to discuss the country’s economic problems. The meeting was chaired by General Secretary Xi Jinping. The Politburo has decided to hold the Fifth Plenary Session of the Central Committee in October this year. As the CCP will be selecting new leadership next October, all eyes will be on the Fifth Plenary Session.

Held generally once in a month, the Politburo meetings are significant for policy input, signalling, and any mid-course corrections. Six meetings have taken place this year, out of 40 such meetings since the 20th CCP in October 2022. The April, July, and December Politburo meetings focus on economic issues every year.

First, the meeting deliberated on how to resurrect economic growth. The CCP, since the Tiananmen Square incident in 1989, has made increasing economic growth rates its mission. However, GDP growth rates have fallen from an average of above 9 per cent in the first three decades of reforms since 1978, to about 6 per cent since 2010, and around 5 per cent over the past few years.

This year’s economic growth figures are also not spectacular. The current West Asian conflict, rising energy costs, as well as pressures from the US and Europe on trade imbalances, state subsidies, and overcapacity issues with China have taken a toll, and the overall picture is worrying the leadership.

Despite a surge in trade (to more than US$ 6.5 trillion in 2025), not all is well with China’s economy. The GDP growth rate, fixed at 4.5– 5 per cent annual growth at the March Parliament session, fell in the second quarter of this year to 4.3 per cent. The real estate sector is in the doldrums, even after Evergrande chief Xu Jiayin was sentenced to life in prison. Property investment, on which hundreds of millions of the rising middle class is dependent, was reduced to 19 per cent in the first half, affecting domestic consumption. Compared to the above 61 per cent domestic consumption in India as a percentage of GDP, which sustains economic growth rates, China’s comparative figures remain around 40 per cent. Manufacturing, China’s core strength, declined to a negative growth of 1.7 per cent. Car sales plummeted by over 20 per cent—the worst performance since 2021.

Even though there is relative economic decline, the July Politburo meeting did not recommend stimulus packages, as was done during the 1997 Asian and 2008 Global Financial Crises due to debt concerns. Instead, the session advocated meeting “difficulties head-on;” “identify and defuse various risks and hidden dangers to resolutely prevent major and serious accidents;” leverage “the effectiveness of existing policies; and roll out practical and effective incremental measures in a timely manner.”

The Politburo advocated quickening “the transition from old growth drivers to new ones” and promoting “sustained innovation-driven, high-quality and sound economic development.” Instead of real estate and low to medium manufacturing, these “new drivers” include infrastructure, AI+ strategies, services, consumption, and others.

The Xinhua read-out of the Politburo meeting mentioned planning and development of “six major infrastructure networks.” Mentioned at the April meeting of the Politburo, these are basically to gear up to “high quality development” and include over a US$ 1 trillion investment in computing power, modern electricity grids, next-generation communications, water, pipelines, and logistics.

The second significance of the Politburo meeting is the CCP’s quest to picture an image of “an anchor of stability” in the midst of global turmoil, geopolitical conflicts, and trade disturbances triggered by the Trump administration and supply chain disruptions. Even though China itself is going through several disruptions—human, financial, technological, and political—it had nevertheless chosen to paint such a picture of certainty.

The transition from the old to a new economy in China—the focus of this July meeting—has taken its toll on Chinese society. For instance, of a World Bank estimate of 768 million workers (dropping from a peak of 781 million in 2021), over 320 million gig workers are now forced to enter temporary jobs, with uncertain income and no social security. The ever growing, AI-driven work force is mainly concentrated in Didi Chuxing, Meituan, and other digital platforms primarily working in food delivery, ride-hailing, digital content creation, and other freelancing occupations. Despite advertising the award of the prestigious Lu Xun Literary prize on 15 July to a food delivery rider, Wang Jibing, for his 6,000-poem collection, “Low Flight,” written during brief pauses while delivering food, the plight of gig workers as such is precarious.

Domestically, China was also straddled by high urban youth unemployment rates of about 18 per cent in July. This includes the “lying flat generation” (tang ping) that refuses the party-apparatchiks’ diktat of the debilitating 9 am—9 pm, 6-days a week work culture and intense wage labour exploitation, or the more extreme “let it rot” (bailan) cohort that accepts the prevailing stagnation.

Financial stability issues cannot also be set aside by China. A real estate meltdown, local government debt, shadow banking, capital flight, and declining tax revenues are creating stress on China’s finances. While China has made major strides in AI, quantum, aerospace, and other technological advancements, the human cost is also rising in these disruptions. An estimated 70 million are expected to be affected by AI-driven disruptions. This is over and above the 60—100 million job losses due to the COVID-19 pandemic.

Thirdly, at the political level, the Politburo meeting reiterated Xi’s ‘core’ position in the party and endorsed the series of purges carried out recently, including in the Politburo. Originally pegged at 25 members, the 20th CCP reduced it to 24 members, possibly to not include Hu Chunhua, as former President Hu Jintao’s forced removal from the venue of the 20th CCP Congress indicated. The current Politburo is further reduced to 21 with the dismissals of Ma Xingrui in July, Zhang Youxia in January, and He Weidong in October 2025, for violation of discipline, law, or on corruption charges. However, in the Kabuki-world of Chinese politics, it is hard to fathom who will be the next target, and thus a sense of uncertainty prevails at the higher echelons of leadership. These political purges have created ambiguity at the strategic level both in the party as well as in the armed forces. While the July Politburo meeting set in motion preparations for the 21st CCP to be held next October, the announcement regarding the Fifth Plenum this October is set to hasten the pace for such leadership preparations. The August Beidaihe meeting—where CCP leaders, party elders, and others assemble annually at the seaside resort to deliberate on policy and personnel selection—appeared to have raised economic development issues, apart from troubled relations with the US and measures against Taiwan.

All in all, the July Politburo meeting was to take stock of the problems facing the country, and propose and implement remedial measures to kick start the transition to the 15th Five Year Plan that will last till 2030. However, no grand initiatives were made public, and political purges are likely to have an overhang on the emerging situation in China. With economic problems persisting amidst geopolitical disruptions in West Asia and others, more concerted action is likely in the near future as China heads for a political transition.

Dr. Srikanth Kondapalli is Professor in Chinese Studies, Jawaharlal Nehru University, New Delhi, and Distinguished Fellow, IPCS.