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Why China’s 13th Five-Year Plan deserves attention

Updated: Mar 6,2016 7:51 AM     Xinhua

China’s draft 13th Five-Year Plan, a strategic blueprint crucial for every Chinese and significant for the rest of the world, will be reviewed at the annual session of the national legislature.

The roadmap will outline the policy framework, priorities and clear economic and social goals, serving as a fundamental guide to China’s development in the coming five years.

It is set to embody the ruling Communist Party of China’s (CPC) new concepts, with innovation foremost in strategies for a balanced, coordinated and sustainable growth pattern.

This is the first Five-Year Plan drafted under the current Chinese leadership, and also the first since China’s economy entered what policymakers refer to as the “new normal,” a phase of moderating growth based more on consumption than the previous mainstay of exports.

The plan’s significance also lies in the fact that the Chinese economy, the world’s second largest, is still facing downward pressure and undergoing structural reforms amid fragile global recovery, after its 2015 expansion of 6.9 percent, the slowest in a quarter of a century.

And the strategic guideline marks the final countdown to the goal of building a moderately prosperous society by the centennial anniversary of the founding of the CPC in 2021. The ambitious target means doubling GDP and per capita income in 2020 from the levels of 2010. Seventy million people need to be lifted out of poverty.

Based on extensive research, seminars, public opinions and expertise, the program will unveil growth expectations in the vital 2016-2020 period for China’s $10-trillion economy, and ways to meet them.

Five-year plans play a navigating role in ensuring the huge Chinese vessel sails to the expected destination.

“In the past, the plans focused on microeconomic intervention. But now, they focus on formulating macroeconomic indices and also planning concerning people’s livelihoods and public affairs,” said Yan Yilong, assistant professor in public policy research at Tsinghua University.

Under the market economy, five-year plans play a supplementary role to the market and guide industrial restructuring in which enterprises are major participants, Yan said, adding such forecasting can help manage public expectations.

China’s first Five-Year Plan was implemented in 1953. With the plans, China’s economy maintained miraculous growth in the three decades after the reform and opening-up policy in the late 1970s.

As China is pushing forward the building of the socialist market economy, some doubt whether the 13th Five-Year Plan is necessary, regarding it as a legacy of the planned economy.

“Long-range plans are ways to communicate to every citizen what the nation’s goals are and what each person needs to do in order to achieve them,” said Shlomo Maital, a senior researcher with Technion-Israel Institute of Technology.

Leading global businesses have long-range strategic plans -- why should countries not have them? After all, a country is a business, he said. “I think other countries have much to learn from China’s planning process.”

As Western economists mock China’s five-year plans as examples of Soviet-era planning, they may want to reflect on lessons drawn from the 2008 global financial crisis, largely blamed on laissez-faire capitalism, said the researcher.

According to Yan, the socialist system’s combination of market forces and government supervision through the Five-Year Plan makes it superior to the capitalist alternative.

“Many Western countries do not have such a plan and even if they have, it is more of a desire, given partisan bargaining. But China has a set of mechanisms to push implementation,” he said.

As the 12th Five-Year Plan concluded with all major targets met, the 13th Five-Year Plan is set to make comprehensive reform arrangements in fields including finance, justice and opening up, and to establish binding targets for improving pubic services and protecting the environment.

“Having binding targets will drive the Chinese government to meet its promises and better perform its duty to realize social fairness,” said Ding Yuanzhu, a policy consultant at the Chinese Academy of Governance.

The next five years will be characterized by innovation, coordination, care for the environment, opening to the world, and the sharing economy, with medium-high growth and industrial upgrading the two major goals.

Cutting red tape and instigating bold, market-oriented reforms in sectors dominated by State-owned enterprises are likely to create a more favorable business environment for both domestic and foreign firms.

Over the next five years, pursuing common, international development, China will become more economically integrated with the outside world through the Belt and Road Initiative, free trade zones, and the internationalization of its currency, the yuan.

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