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SMT Perspectives and Prospects
By Dr. Jennie Hwang
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New Year Outlook: China’s Five Year Plan
Once again, it is time to look at the year ahead. This relished tradition puts me on the spot to think more intensely about the coming year. In this first column of the New Year, I usually take a long view on market thrusts in the anticipated global economic landscape, as well as mega-technological trends, which include: the highlights of macro-economy outlook, China factor, oil dynamics, cyber security, and grand challenges in technology and the path forward.
Reflecting on 2015, China was under an unusual light as the world watched its economic slowdown and other unprecedented and/or unexpected events unfold. Moreover, 2016 bears new milestones for China. Beijing will reveal a new Five-Year Plan (FYP) for 2016–2020, which is the very first FYP under the Xi Jinping administration. The yuan has also been added to the IMF’s Special Drawing Rights (SDR) currency basket. Therefore, this time around I will use this limited space to focus only on the China factor, specifically addressing the new FYP, notable events in 2015, anticipated key strategies, innovation as an emblem, and anticipated economic landscape.
China is not just a factor, but it’s becoming a pivotal factor! As the world’s second largest economy and the world’s most populous country with huge upside potential, China plays an increasingly important role to the global economic growth, as well as to corporate business. However, against the backdrop of slower growth, what is China’s latest vision for its country
Five-Year Plan (2016–2020)
Every five years, China’s National People’s Congress (NPC) approves a Five-Year Plan, which dictates China’s economic and social policy. The FYP is a luminous blueprint for China’s economic trajectory and serves as the holistic strategy behind it.
The country has been diligently and intensively working on its 13th FYP for national economic and social development, dubbed 13.5. This all-encompassing product is the result of comprehensive, disciplined, and systematic effort, serving not only as the guiding principle, but in fact the implementable practice. More importantly, the Plan is truly put into work.
The phenomenal growth and reform during the last three decades demonstrably manifest the power of the Plan, although results may not always be straightforward and speed bumps have inevitably been encountered along the way.
In preparation for drafting the 13th FYP, the National Development and Reform Commission (NDRC) solicits applications from large corporations, industry associations, universities, research institutions, and international organizations to participate in the initial research phase. The previous FYP is evaluated for what worked and what still needs more work. Information, ideas, opinions and data are collected from all elements of society, including policy analysts, scientists, engineers, local governments, advisory bodies and the public. After the NPC approval, China’s Central Government implements the Plan and passes it to local provincial and city governments for implementation.
Considering a slowing economy, the plan will build on the 12th FYP and will serve as a framework to advance key national reforms introduced under Xi Jinping’s administration and to adjust China’s economic growth model, in order to maintain stable growth. The goal of this first plan under the Xi administration is to promote China’s transition to a consumption-driven, sustainable economy, and moderately prosperous society. The Plan emphasizes quality of economic growth instead of numerical GDP growth.
Beijing’s broader strategic target—to double the size of China’s economy and the people’s average income from 2010 to 2020—is expected to be maintained. To meet the target, GDP growth is believed to need to be around a 6.5% average annually.
Editor's Note: This article originally appeared in the January 2016 issue of SMT Magazine.
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