BOFIT Viikkokatsaus / BOFIT Weekly Review 2020/46

When the Central Committee of the Communist Party of China (CPC) wound up its 5th plenary session on October 30, it announced the outline of the latest version of the next five-year plan (2021–2025), as well as the CPC’s long-term objectives through 2035. The 14th five-year plan showcases familiar themes such as economic prosperity, self-sufficiency and technological advancement but is devoid of significant new initiatives. Particularly notable was the lack of emphasis on environmental issues, especially since president Xi Jinping announced in September that China will seek to be carbon neutral by 2060. Final approval of the plan will take place at the National People’s Congress next spring.

The themes highlighted in the 5-year plan to some extent reflect the deterioration of US-China relations. In recent months, China’s leadership has stressed the importance of self-sufficiency in the face of US export restrictions on high technology products such as microchips that China cannot produce. In addition, there is a strong emphasis on research & development and innovations in the plan, which reflects also China’s aims to take leadership roles in select technology fields involving genetics, nanotechnology, artificial intelligence and robotics, targets set in 2015 with the launch of the Made in China 2025 programme. As a leading country, China can no longer copy from others, but must develop new technologies on its own.

Besides the rollout of the 5-year plan, China’s leadership also announced a further details on 2035 targets as outlined by president Xi in 2017. China seeks to be a “moderately developed” economy within the next 15 years. President Xi this week reiterated that long-term numerical GDP growth targets is not set, but noted that it is “completely possible” that China can double real GDP between 2020 and 2035. Such a doubling would require an average GDP growth rate of just under 5 % a year to bring GDP per capita into line with living standards of Poland by 2035. To meet exceptionally ambitious growth target, China will need to continue to keep its economic policy very accommodative and continue piling on debt. The target is conflicted as China’s stated goals prioritise quality of growth over quantity of growth.

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