Modest growth goal expected in five-year policy blueprint

Monday, October 26, 2020

A national development proposal for the five years to 2025 will be discussed by the Chinese communist leaders in Beijing from today.

In the final year of the current five-year plan, no annual economic growth rate was set amid the global economic decline from the coronavirus pandemic in the mainland. Instead, maintaining employment became the primary goal, the China Daily said.

The 14th plan  is expected to include a more modest annual growth target of between 5 and 6 percent, with closer to 5 percent acceptable in a trade-off to securing quality growth and combating climate concerns.

At the fifth plenary session of the 19th Communist Party Central Committee, President Xi Jinping, delivered a work report, and briefed the participants about the draft proposals of the the 14th Five-Year Plan for economic and social development and targets for 2035 — a top-level policy blueprint for China's mid- and long-term development, the China Daily said.

For Xi, the next half decade and beyond builds on eight years in which he abolished term limits and consolidated political power, CNBC reports.

One of the key milestones ahead is the 100th anniversary of the Chinese Communist Party in 2021 — authorities have pledged to build a “moderately prosperous society” by next year.

Then in 2022, the 20th Congress of the Chinese Communist Party will shed light on Xi’s future leadership plans.

There are many more dates ahead that the authoritarian government has named for development goals. They include the “Made in China 2025” plan to dominate in high-tech and key manufacturing areas, and “China Standards 2035” for global specifications on leading technology.

The final text of the upcoming five-year plan is due for release next year at the

 National People’s Congress typically held in March.
“One thing I think will stand out is the supply chain security,” Dan Wang, Shanghai-based chief economist at Hang Seng China, told CNBC in a phone interview.

“I think there will be some major adjustments because this 14th five-year plan is a long-term plan. It’s not an emergency plan,” Wang said. “It will drive some of the long term issues. Now with some of the U.S. competition, there will be a lot of stress on strengthening those sectors related to national security and basic livelihood of (the) people.”

Following years of criticism that state-dominated China has unfairly taken advantage of global markets, U.S. President Donald Trump’s administration has taken a tougher stance on Beijing that many expect will continue in some form — even if Democratic nominee Joe Biden becomes president next year. Trump has pressured China to buy more American goods, while hampering Beijing’s technological advancement with restrictions on companies such as Chinese telecommunications giant Huawei.

The uncertainty of whether Chinese tech firms can continue to collaborate with U.S. companies is accelerating Beijing’s efforts to ensure future technological prowess.

In a speech earlier this month, Xi talked up support for quantum mechanics, which can drive the development of supercomputers which have processing abilities that far exceed current systems.

With national security in mind, Yue Su, principal economist at The Economist Intelligence Unit (EIU), expects the five-year plan to stress support for technology such as semiconductors. She also anticipates the plan will discuss building resilience in energy security rather than relying on petroleum imports, and ensuring food security in the face of trade tensions with agriculture-producing countries and a shortage in pork, a staple in Chinese households.

From a social perspective, Su expects China to find more ways to boost consumption, including abolishing limits on the number of children families can have.

“I would put it at the top (of) the topics to be watched,” she said, noting such a move would help China’s medium- to long-term growth.

China’s economic growth has slowed in the last few years, amid concerns about fast-paced growth fueled by debt. Under the 13th five-year plan, which outlined the government priorities from 2016 to 2020, China moved incrementally to relying more on consumption for growth rather than exports.

In the last several months, public officials have talked up a new phrase that is expected to underpin the plan for the next five years, a concept they refer to as “dual circulation.” It is broadly split into two parts: “internal circulation” focused on growing China’s domestic market, and “external circulation” — or trade with other countries.

“The 14th five-year plan isn’t just about the next five years, but the next 30 years,” said Qin Gang, founder of YaSong (Ode & Song) City Strategy and a consultant for many real estate development projects. That’s according to a CNBC translation of his remarks in Putonghua.