The Chinese Communist Party is expected to release two action plans after four days of closed-door meetings in Beijing: their usual five-year plan and a longer strategy document that runs through 2035. In the face of heightened tensions with the Chinese United States and a virus – battered global economy, Beijing officials should chart a course that relies on domestic resources and consumption to secure growth.
The party’s Central Committee – a group of around 200 senior leaders – typically issues a broad-worded statement that will be fleshed out in the coming weeks before approval by the Chinese parliament next year. The plan will focus ontechnological innovation, consumption, pollution control and more promises to continue to open the economy to foreign competition.
Unlike the last five-year plan, which aimed to achieve “medium to high growth” in order to build a “moderately prosperous society”, this plenum should focus on quality rather than the pace of growth, or even abandon GDP targets. Investors and businesses are looking for signals about policies that may shape global demand.
“China now realizes that it is vulnerable,” said Wang Huiyao, adviser to the Chinese cabinet and founder of the Center for China and Globalization, referring to the sanctions imposed on Chinese companies. ” Soleaders need to be prepared for things like technological decoupling. ”
The plan will focus on how to ‘manage an aggressive foreign policy towards China and Chinese companies, ”according to Iris Pang, chief economist of Greater China at ING Bank NV. “The funds will flow into companies that can show their ability to promote advanced technologies.”
As a rule, a general overview of the proposals is published at the end of the meeting. More details emerge in the week following when state media released a comprehensive development plan. The full picture will not be released until the national legislature puts its own stamp on the plan next spring.
What Bloomberg Economists Say
“Growth is on track to be the slowest in the reform era, blunted by a trade war with the United States and the coronavirus pandemic. Technological, demographic and climatic challenges require a strategic realignment of policies affecting many aspects of the economy. ”
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Chang Shu, Chief Economist for Asia
China can also provide more concrete benchmarks for delivering on the government’s promise to build a “great modern socialist country” by the middle of the 21st century, with 2035 being halfway there. The flagship initiative of the last five-year plan was the reform of the supply, which swept away parts of obsolete capacity in sectors such as steel and coal. The plan also set targets to make inroads in key technologies and help China become a country rich in talent for innovation, initiatives that ongoing geopolitical tensions are expected to accelerate.
Far from the headlines, there will be other microeconomic changes that may take longer to materialize, said Helen Qiao, chief Greater China economist at Bank of America.
“The orientations of the structural changes that the 14th five-year plan identifies will be the most important, although the specific proposals of certain numerical objectives or fiscal measures – inheritance tax, property tax, etc. – are not implemented within this framework period, ”she said.
– With the help of Lucille Liu and Enda Curran