China’s GDP dipped to 4.7 per cent in the second quarter, the government said on Monday, as the ruling Communist Party began a key meeting stated to be a defining moment for President Xi Jinping’s leadership to revive the world's second-largest economy.

The four-day meeting called the 'Third Plenum' is being attended by 376 full and alternate members of the Communist Party of China (CPC) Central Committee to primarily examine issues related to comprehensively deepening reforms and advancing China's modernisation to work out a course correction for the economy plagued by deepening demographic crisis, sluggish growth and mounting local government debts.

Kicking off the meeting Xi 71, who is also general secretary of the party, delivered a work report and expounded on a draft decision of the CPC Central Committee on further comprehensively deepening reform and advancing Chinese modernisation, the official media reported.

The meeting, however, began here on a disappointing note for the party leadership as the National Bureau of Statistics (NBS) announced the GDP for the second quarter expanded by 4.7 per cent well below the 5.3 per cent annual pace of growth in the first quarter of the year.

The silver lining for the CPC, which is searching for a new set of reforms to shake off the post-COVID lockdown blues, the economy posted a five per cent growth in the first half, within the range of the official growth target fixed for the year.

“The current external environment is complicated, while domestic demand remains insufficient. We still need to consolidate the foundation for economic recovery,” the NBS said on Monday.

While the third plenum of the CPC was regarded as important to set the reform agenda for the next decade, the meeting was seen as a defining moment for Xi, who is into the unprecedented third five-year term as the economy was unable to shake off its slowdown mode resulting in a sense of unease about the recovery in the near future.

Ahead of the meeting, Xi presided over a host of meetings to set the tone for the key plenum and chart the direction for the nation's future reform highlighting that "the furthering of reform must focus on refining and developing the system of socialism with Chinese characteristics, and advance modernisation of the country's governance system and governance capacity".

A readout of a key party meeting presided over by Xi in February said: "Reform measures need to be sharply focused, targeting the most pressing problems. Reform efforts must be substantial and impactful." The event could be the most important “defining moment” of President Xi Jinping’s rule since a similar gathering in 2013 that set out his vision for reforming the country, a political researcher from Tsinghua University, who requested anonymity, told the Hong Kong-based South China Morning Post.

He said the watershed third plenum would be used by the party elite to review achievements under Xi’s leadership and lay down plans to hit goals set for 2035, “which will lay the groundwork for the President’s grand legacy of the great rejuvenation of the Chinese nation by 2049”.

The plenum is also taking place at a time when China, struggling with various curbs and sanctions from the US and the EU, especially its high-tech products, is trying to assure both foreign business and the private sector at home about the country's economic prospects to attract investments.

Neil Thomas, a fellow for Chinese politics at the Asia Society Policy Institute’s Centre for China Analysis, said Xi would use the plenum to advance his existing agenda focused on party control, technological self-reliance, financial de-risking, social welfare, and supply-side industrial policy.

But the political challenges of economic pessimism could lead to some very modest ‘positive surprises’, he told the Post.

The most intriguing new signals ahead of the plenum suggest the possibility of more pro-business policies in hi-tech domains, although Xi does not want to unleash entrepreneurs and markets but rather harness them to develop technology and boost manufacturing, he said.

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