Under the Chinese Communist Party, ‘a planned economy can’t keep up with the needs of a modern market,’ one expert said.
China’s Fourth Plenum recently wrapped up with a familiar pledge: The next five-year plan will deliver “high-quality development” and “technological self-reliance” under even tighter Chinese Communist Party (CCP) control. Officials were told to brave “high winds, choppy waves, and even dangerous storms.”
While the Party’s tone was confident, experts who spoke with The Epoch Times gave a very different picture.
“So far, money is voting with its feet,” said Frank Tian Xie, a business professor at the University of South Carolina Aiken.
China’s economic system, the experts said, still runs on the same principle: the CCP overrides prices, law, and accountability.
This creates a cyclical pattern—from Mao Zedong’s central planning to Deng Xiaoping’s “birdcage” reforms and now Xi Jinping’s recentralization—that consistently results in deadlock, the analysts noted.
Each time Beijing tightens its control, private enterprise stagnates. When it eases restrictions, politically connected insiders profit, and the controls tighten again.
The Fourth Plenum didn’t break that pattern; instead, it reinforced it, they said.
What Beijing Promised and What Investors See
The Fourth Plenum communiqué packed the 15th Five-Year Plan with the usual slogans—“high-quality development,” “self-reliance and strength in science and technology,” “opening up,” “reform comprehensively”—all under “unified” Party leadership.
To investors, that translates into heavier state direction combined with appeals for private and foreign capital to keep growth alive, Xie told The Epoch Times.
China’s balance-of-payments data—the record of its transactions with the rest of the world—show that net foreign direct investment (FDI) has fallen to its lowest level since the early 1990s.
Net FDI inflows plunged from a peak of $344 billion in 2021 to $51.3 billion in 2023—an 85 percent drop—then fell further to about $18.6 billion in 2024, the lowest in three decades, according to official data.
The squeeze deepened when China’s real estate boom collapsed in late 2021. As land sales and home purchases dried up, local governments lost their main source of income. For years, the Chinese regime had financed subways, airports, and industrial parks through local government financing vehicles, or LGFVs—entities that acted as intermediaries to raise funds for development projects.
Now, LGFVs are struggling to refinance an estimated 78 trillion yuan ($10 trillion) in liabilities—more than half the size of China’s economy—according to research by global financial services group BBVA.
In 2024, real estate investment fell 10.6 percent, new construction starts dropped 23 percent, and land-sale revenue—critical for local governments—fell for the third straight year, down 16 percent from 2023, according to China’s National Bureau of Statistics.
The weak property market has added pressure to an already bleak job outlook for young people.
In August 2025, official data put youth unemployment (ages 16–24) at about 19 percent—the highest since the regime introduced a revised methodology in December 2023 that lowered the rate by excluding students.
By comparison, the Organization for Economic Cooperation and Development (OECD) youth unemployment average stood at 11.2 percent in July 2025, with the United States at 10.8 percent and Japan at 4.1 percent.
“None of those numbers suggests a turnaround is near,” Xie said, referring to data regarding FDI investment, property market revenue, and youth unemployment.
By Sean Tseng
