China’s economy faltered in the second quarter, according to official data, coinciding with a crucial meeting of the country’s top leaders addressing its sluggish growth. The economy expanded by 4.7% in the three months leading up to June, falling short of expectations after a strong start in early 2024. The government’s annual growth target is approximately 5%.

“China’s economy decelerated in the June quarter,” noted Heron Lim at Moody’s Analytics, adding that analysts are looking for solutions from the ongoing meeting in Beijing, known as the Third Plenum.

The world’s second-largest economy is grappling with a prolonged property crisis, significant local government debt, weak consumption, and high unemployment.

Historically, outcomes of the Plenum have been pivotal for China. In 1978, Deng Xiaoping initiated the opening of China’s markets to the world, and in 2013, President Xi Jinping signaled potential changes to the one-child policy.

This year’s Plenum, led by Mr. Xi, involves a closed-door gathering of over 370 high-ranking Chinese Communist Party members. State-controlled media has been optimistic, with The Global Times editorial suggesting a “wide range of reform-focused policies” high on the agenda, promising a “new chapter.” Xinhua mentioned “comprehensive” and “unprecedented” reforms, while the People’s Daily spoke of a “new era of reform and opening up,” echoing Deng’s 1978 vision.

Despite the hopeful rhetoric, observers are uncertain about the scope for bold ideas or debate under Mr. Xi’s centralized leadership. Some view the meeting as a formality for pre-decided measures.

Economists doubt the meeting will provide an immediate boost. Qian Wang, Asia Pacific chief economist at Vanguard, believes it will have “little impact on near-term growth,” focusing instead on long-term reforms to “unleash long-term growth potential.”

Nevertheless, analysts will be watching closely for announcements that indicate the Party’s economic priorities.