China’s top Communist Party leaders will meet late next month to sign off on the next five-year grand plan for the economy.
The Party’s annual plenary meeting in Zhongnanhai will lay down economic and social development imperatives to be attained by 2025.
A Xinhua circular noted that the four-day session will start on October 26. A draft of the Five-Year Plan has been finalized with policy recommendations from a wide cross-section of the media and academia.
The plan will be the 14th since Beijing started to draw up such an all-encompassing economic and social development roadmap in the 1950s during the rule of Mao Zedong. Beijing is still sticking to such top-down, centralized planning that bears all the hallmarks of a Soviet system four decades after Deng Xiaoping’s economic liberalization.
Xinhua said keeping such planning could help local officials check off key agenda items and deliver on Beijing’s initiatives for economic and social advancement. It added that economic planning for the next five years will also prove consequential as Beijing seeks to contain the falling-out with the United States, stamp out the coronavirus and strategize the way forward amid shifting geopolitics.
It has been revealed that government advisers and policy experts have, in heated debates with senior officials in charge of the plan’s drafting, prodded Beijing to cut the annual growth target for the next five years to 5-6% to reflect the lingering economic malaise from Covid-19 and looming China-US decoupling.
Deputy-Premier Han Zheng, who led a high-powered group for the drafting, reputedly settled for the median of 5.5%. The GDP target for the previous plan was 6.5%.
An annual moving average of 5.5-6% for the next five years will be modest and attainable for China to avoid slipping into the “mid-income trap,” while other developing countries such as Argentina, Brazil and South Africa are still stagnating, said an expert with the Chinese State Council’s Development Research Center.
China is set to graduate to the class of high-income countries within five years as its average gross national income nears the World Bank threshold of US$15,000.
Stakes have also been raised over targets and initiatives in the new plan, which will cover the sensitive period beyond 2023, when President Xi Jinping ought to step down if the normally pliant parliament has not endorsed a constitutional amendment to scrap his term limit.
And in a hint of Xi’s aspirations for his extended and seemingly indefinite tenure beyond 2023, Xinhua also noted that Xi and other members of the party’s inner sanctum will also discuss and determine “long-term goals and objectives” up to 2035. Many Party members believe that by then China will have edged past the United States as the world’s largest economy.
The new Five-Year Plan will also contain fresh policy initiatives to implement Xi’s “dual circulation” policy, with an emphasis on internal circulation to spur investment, innovation and spending. The bid to spawn more domestic demand and consumption will be the grounds for Beijing to build on its ambitions for 2035.
Meanwhile, Justin Lin, a Peking University professor and a former World Bank deputy-governor, who is one of Xi’s top advisers on economic affairs, also revealed that Beijing had agreed to scrap 2020 GDP targets for a number of inland provinces like Hubei, the original coronavirus epicenter, and that national GDP growth for 2020 would be capped at 3%. Premier Li Keqiang did not announce a growth target for 2020 at this year’s parliamentary session.
Lin said even though better-off, coastal provinces were confident they could pull off much higher growth in the final quarter with more policy loosening, Beijing had opted to boost its war chest to prepare for a possible relapse of the contagion.
The economist also caused a stir by saying China could have easily fired up economic recovery to “hit double digits” for the second half with easier credit conditions, liquidity injections and fiscal stimulus. “But Beijing has hit the brake for its crusade for breakneck growth.”
The Chinese economy contracted by 6.8% year-on-year in the first quarter when the virus ravaged the country, but growth bounced back to positive territory and booked a 3.2% jump between April and June, after the virus was subdued. The upswing is set to extend to the rest of the year. Domestic consumption is shaping up well after being hit hard by the virus in January and February.
About 600 million Chinese will get out and about and spend during the eight-day National Day Golden Week break starting from October, the Ministry of Culture and Tourism says.