China’s Latest Five-Year Plan and Long-Range Objectives

Based on a PWC Report on the above, we highlight the key points for the blog today.

Early January 2021, the Communist Party of China Central Committee (“CPCCC”) published the CPCCC’s Proposals for the Formulation of the 14^th Five-Year Plan (2021-2025) for National Economic and Social Development and the Long-Range Objectives Through the Year 2035 (“the Proposals”).

Containing more than 20,000 words, the Proposals offer 60 recommendations in 15 sections. It serves as a significant guideline for China’s social and economic development in the five to fifteen years to come.

The 14th Five-Year Plan states that we will “make new strides in economic development, take new steps in reform and opening up, further enhance social etiquette and civility, make new progress in building an ecological civilisation, further promote the well-being of people and further improve governance capacity”. China will therefore pay more attention to high-quality and coordinated development, instead of GDP growth as usual. However, it is generally viewed that the actual average annual growth rate in the next five years will be maintained at 5%-5.5%.

The innovation-driven development strategy was already proposed in the 13th Five-Year Plan, yet its significance has been highlighted in the 14th Five-Year Plan. Only booming technological innovation can assure sustainable economic development.

The innovation-driven strategy is followed by an initiative to build up a modern industrial system. The Proposals particularly highlights the significance of reinforcing the weak links of, diversifying and securing industrial and supply chains. The Proposals stresses that China will unswervingly build itself into a manufacturing power, put more emphasis on quality and enhance its strength in cyberspace and digital technology. In addition, it also underlines that China will foster strategic emerging industries, such as the new generation information technology, biotechnology, new energy, advanced materials, high-end devices, new energy vehicles, green environmental protection, aerospace and marine equipment, and accelerate the development of modern service industry, new infrastructure and digital economy.

The “dual circulation” strategy is undoubtedly one of the most significant highlights in the 14th Five-Year Plan. In May, the central government introduced this strategy, urging that domestic circulation must serve as the mainstay of the economic balance, with domestic and international circulations reinforcing each other. For this purpose, China must accelerate supply-side structural reforms to optimise its supply structure, improve supply quality and align supply with demand; remove the systemic and institutional barriers to market-based allocation of factors of production and circulation of commodities and services to reduce exchange costs; and improve the policies in support of kick-starting domestic demand, so as to strike an economic balance where demand drives supply and supply, in turn, creates demand.

Additionally, in order to propel domestic demands and support the domestic economic circulation, the Proposals illustrate measures to comprehensively promote consumption and expand room for investment respectively.

The Proposals indicate that China will stick to drive high-quality development and international cooperation under the Belt and Road Initiative while expanding high-level opening-up. And achievements in these fields would enable China to be less economically dependent on European and American countries to a certain extent.

Many other interesting ideas are said in the Proposals. And China has the political will to implement them. But innovation cannot be manufactured. So, people like Jack Ma have a better future in America than China. Here lies the problem-- more freedom and innovation or socialism with Chinese characteristics and “manufactured” solutions?  

 

Reference:

Interpretations on the 14th Five-Year Plan and the Long-Range Objectives Through the Year 2035, PWC