On October 29, roughly 360 top officials wrapped up the 5th plenum of the Chinese Communist Party’s 19th Central Committee in Beijing. After a four-day meeting chaired by President Xi Jinping, top leaders finalized the blueprint for the 14th Five-Year Plan, which will determine China’s economic and social policy vision from 2021-2025. This Five-Year Plan was met with praise and admiration for the last five-year plan, with officials applauding its positive outcomes while highlighting the work still to be done in order for China to further its development. Emphasis on repairing inequality between rural and urban residents, environmental issues, and innovation were put into focus during this four-day meeting.
The leaders of the meeting stressed “technology self-reliance” as a means to boost support for national development. Though confidence in a strong China-U.S. partnership is welcome among officials from both countries, recent tensions between the two alluded to the CCP’s need for domestic market growth. Citing new challenges brought about by the nuance of the current international environment, the communique urges the CCP to “maintain strategic resolve and manage our own affairs well.” This comes on the heels of recent U.S. threats to ban Bytedance’s Ltd.’s TikTok app and Tencent Holdings Ltd.’s WeChat. Additionally, because of U.S. sanctions, The Wall Street Journal reports that Huawei Technologies Co. is running out of processor chips to make smartphones, possibly forcing the company to suspend production of its own most-advanced chips.
This draw toward technology and the construction of China’s own technological foundation at its core will be the catalyst of major breakthroughs in key core technologies such as artificial intelligence, semiconductors, big data, and telecommunications; allowing China to become a global leader in innovation and achieve “new industrialization, informatization, urbanization, and agricultural modernization,” according to the communique. What is important to note is that these technology goals are set to be achieved by 2035, suggesting the plenum participants discussed a more ambitious 15-year blueprint that surpasses all previous plans.
The new policy blueprint will also target domestic companies and markets as the main pilots of China’s growth in a shift toward supporting more national initiatives. If this is the case, China’s previous overseas investment and technologies that once dominated its development will have less of a hold; thus, effectively diversifying its economy even further. This “dual circulation” strategy, a term coined by President Xi last spring, recommends an inward focus for economic evolution. The “domestic cycle” suggests internal production and consumption will be at the heart of this five-year plan, which is then complemented by the “international cycle” that spotlights foreign trade and investment involving coordination with the U.S. The communique mentions in its promise to broaden foreign access to Chinese markets that China will “open wider, and in more areas…and will rely on the advantages of China’s large market to promote international cooperation.”
Economists at Goldman Sachs Group write: “Although the Chinese government has been calling for a transition in the development model for a number of years, given that the broad external and domestic environment has changed, we think the government is likely to accelerate the pace of relevant reforms in the next five years, to achieve sustainable, balanced and high quality growth and enter the high income group from the upper middle income group.”
Though no specific target for GDP growth was stated, experts predict that the world could still see a soft GDP target added in the final version of the 14th Five-Year Plan approved next year. The communique pledged a longer-term target of progressing the country’s per capita levels up to that of “moderately developed countries” by 2035. Through sustained and healthy growth highlighting a form of “new urbanization” marked by “significantly improved quality and efficiency,” the blueprint will productively tackle China’s domestic issues and, more importantly, offer a significant reduction in the earning gaps between rural and urban residents.
A more detailed version of the 14th Five-Year Plan accompanied by strategic tactics will be unveiled in the spring, when China’s legislature is due to officially implement the new plan. For now, this blueprint reveals the broad outlines of President Xi and the Communist Party’s efforts to retool the economy so that internal forces remain at the forefront of advancement. However, the plan also accommodates increased globalization, promoting multinational coordination and particularly, China-U.S. cooperation. Though it remains unseen how the partnership between China and the U.S. will unfold, it is apparent that a positive evolution advocating for win-win collaboration is encouraged among the two nations.