China's five year economic plan is rich with symbolism

China’s latest five-year plan, the details of which were endorsed at last week’s fifth plenum, aims to double the nation’s GDP and per capita income by 2020 (from 2010 numbers).

The 2020 deadline is important because it is the final year of the 13th five-year plan, the first plan led by Xi Jinping and Li Keqiang. It would allow the Chinese Communist Party to claim a doubling of the country’s economic size in the decade preceding the 100th anniversary of the Party’s founding in 1921.

The full details of the 13th five-year plan will not be revealed until it is endorsed by China’s parliament in March 2016, but we know it is a document of around 100 pages or more setting out social and economic development plans for the next five years. Since the release of the first five-year plan in 1953, China has published 12 such documents, though the official name for the last two programs changed from “five-year plan” to “five-year guideline” to reflect a more market-oriented economy.

The plan is the latest set of indications that the Chinese leadership is determined to foster a “new normal” for Chinese economic growth. One that is based upon domestic consumption, services and strategic innovation, rather than the exports and state-led investment of the past.

The catch phrases used throughout the fifth plenum were of sustainable growth through technology, quality and efficiency. Innovative and high-tech agricultural and services sector investments will be encouraged. Encouraging noises are also being made about the sharing economy and big data, though I suspect the social (and thus political) side effects of growth in these area will be strictly controlled to ensure they are properly endowed with “Chinese characteristics”.

Improved environmental protection policies and increased levels of urbanisation are both important parts of this new normal for China’s economy. The tension between the two is reflected in the more modest “moderately high” annual growth rates of closer to 6.5% than the 7% annual growth of the current five-year plan.

If China is to realise these ambitions then its globalisation plans will need to be successful. These include, notably, the Asian Infrastructure Investment Bank and China’s “One Belt, One Road” initiative which was featured at the recent Euro-Asia Economic Forum held in Xian.

In addition to ending the one child policy, the other major announcement on social policy revealed during the 5th Plenum was that old-age insurance will be extended to all Chinese citizens. Until now, access to such insurance has largely depended upon which provincial or municipal plan a resident had access to.

Improved access to old-age insurance along with continued improvements to environmental policies and conditions are essential to maintaining social harmony. They are also crucial for realising China’s goal of “a moderately prosperous society in all respects by the centennial anniversary of the founding of the CCP”. While the Chinese Communist Party may not face the prospect of electoral defeat at regular open and competitive elections, there still remains an unspoken contract with China’s people to provide access to continued prosperity. The fear of social unrest should this contract not be honoured remains very real.

The final part of the Party keeping its contract with the people lies in being seen to keep leadership accountable, at least in the worst cases of abuse of power.

Chinese newspaper People’s Daily reported last week that “more than half” of the Party’s Central Committee members selected during the 18th CPC National Congress in 2012 have been moved to different positions or were removed form their current jobs ahead of the 5th plenary session. It described this as “extremely rare”, although reshuffling of personnel and positions is not uncommon at fifth plenums. At least three alternate members of the CPCC were elevated during this 5th plenum to replace full members who were removed on charges of corruption, something which results directly from recent efforts to target “tigers” as well as “flies” in the anti-corruption effort.

On Friday, Chinese state media also reported (with strategic timing ahead of the 5th plenum) that anti-corruption body the Central Commission for Discipline Inspection would “expand its inspections into more state entities this year, with its sight set on major financial institutions including the central bank, securities regulators and state-owned banks,” a process which has already begun.

Alice de Jonge does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond the academic appointment above.

Source: http://theconversation.com/chinas-five-year-economic-plan-is-rich-with-symbolism-50001