The National People's Congress in China has approved the 14th Five-Year Plan of the People's Republic. The China.Table editorial team explains what the plan is about and its key targets.
Definition: What is China’s Five-Year Plan?
Five-Year Plans in China can be simply explained: In communist countries, a Five-Year Plan is an instrument used to plan the national economic development. It specifies what sectors are particularly important and what goals should be pursued. The Five-Year Plan in China is decided by the National People's Congress, which can be described as the country's parliament. The Chinese Communist Party (CCP) governs the People's Republic of China. Since opposition parties are not allowed to be elected to parliament, only decisions made by the CCP are approved by the National People's Congress.
When the People’s Republic of China was founded on October 1, 1949, the country was in ruins. Invasions and civil wars had driven the population to the abyss. Mao Zedong worked mercilessly to rebuild the nation. After re-establishing a viable economic base, the First Five-Year Plan was put into effect in 1953. Aims of China's First Five-Year Plan were to clock through the transformation from a peasant state to an industrial nation. Yet, Mao Zedong himself was not a great friend of Five-Year Plans. He criticized the bureaucracy and feared that apparatchiks, like the great landowners he had expropriated, would turn into the new ruling class.
Five-Year Plans: How did poverty and living standards develop in China?
Part of the Second Five-Year Plan was the Great Leap Forward campaign from 1958 to 1961. Agriculture was centralized and private farming was banned. A three-year famine that cost the lives of 15 to 55 million Chinese followed suit. Even cases of cannibalism were documented.
Since then, China has undergone profound change. While in 1978, 770 million people in rural China lived in poverty, only 5.1 million did so in 2019. According to the China Internet Information Center, China’s poverty rate fell from 97.5 percent to 0.6 percent.
China’s Five-Year Plans: Industrialization boosts China's GDP
Despite the enormous improvement of living standards, China is still recognized as a developing country by numerous organizations. This can mainly be explained by looking at the gross domestic product per capita. According to the International Monetary Fund (IMF), China’s GDP per capita was $10,522 in 2019. The global average is around 1,000 dollars higher. The People's Republic of China thus ranks 69th place.
Regardless of the humbling statistics, the focus of China’s Five-Year Plans has shifted. Fighting hunger is no longer a top priority for China's leaders. In 2016, China implemented the 13th Five-Year Plan. It focused primarily on doubling economic output by 2020, compared to the output of 2010. Other priorities of the 13th Five-Year Plan were innovation-driven development, general environmental improvements, as well as the development of environmental technology industries, the expansion of the service sector as well as increased spending on research. Innovations were to boost the national economy.
China's 14th Five-Year Plan: Will China be the next superpower?
China's 14th Five-Year Plan was drafted in October/ November 2020 and covers the years 2021-2025. While innovations remain at the core, the plan partly shifts focus from quantitative economic growth towards domestic economy and social development. China's 14th Five-Year Plan is designed to consolidate the People's Republic's role as one of the leading science and technology nations and becoming a global manufacturing superpower. The 14th Five-Year Plan clearly states this. Innovations in the fields of artificial intelligence, quantum technology, information technology, brain research, biotechnology, digitization, and aerospace should serve the rise to a superpower. Climate targets are anchored for the first time.
The U.S.-China trade war of recent months has also resulted in China devoting itself to dual circulation in the current Five-Year Plan. The Dual Circulation policy is a centerpiece of China's 14th Five-Year Plan. It which aims to strengthen China's domestic economy and make China's foreign economy less dependent on exports.
China's 14th Five-Year Plan: Reduce dependencies, strengthen domestic economy
But the trade war with the U.S. is not the sole reason for the focus of the 14th Five-Year Plan. The coronavirus pandemic has taught China that it cannot rely on global trading partners for its growth plans. If the economy of a different large nation collapsed, China would suffer as well.
Hence, the 14th Five-Year Plan calls for the stimulation of domestic demand and the strengthening of regional trade alliances. The Dual Circulation strategy is also intended to inject new momentum into the Made in China 2025 strategy. Made in China 2025 is a policy of the 13th Five-Year Plan that aims at China becoming a leading high-tech superpower. It represents an intermediate step toward China’s goal of becoming the world's leading economy in 2049.
Climate change and climate targets in China's 14th Five-Year Plan
Addressing climate change is another cornerstone of China’s 14th Five-Year Plan. In 2021, Xi Jinping, China’s president, gave a speech at the United Nations, in which he promised to strive to peak carbon dioxide emissions before 2030. This implied that emissions are to be reduced from 2030 onwards. After all, China aims to reach climate-neutrality in 2060. Climate change and environmental issues were already part of the 13th Five-Year Plan from 2016. The 14th Five-Year Plan, however, states climate targets as official objectives.
Both the 14th Five-Year Plan from 2021 and the following plan must lay a crucial foundation for climate targets; especially so, with regards to China’s coal consumption. The 14th Five-Year Plan states that green production and lifestyles are to be promoted on a broad basis. At the same time, however, oil and gas production will be pushed forward, including also new pipelines. Whether rather vague reforms of high-emission industries such as steel, chemicals and building materials can compensate for the continued reliance on fossil resources remains questionable.
China’s 14th Five-Year Plan: SASAC under pressure
With the implementation of the 14th Five-Year Plan SASAC is likely to come under pressure. The abbreviation stands for State-Owned Assets Supervision and Administration Commission of the State Council (SASAC). SASAC is a special commission that is responsible for managing all Chinese state-owned enterprises. Currently, there are around one hundred centrally managed companies. The SASAC’s scope spans from airlines, electricity producers, mobile phone providers to oil companies and more.
State-owned enterprises play an important role in China’s Dual Circulation strategy. However, state-owned companies have become weaker in the past years. Most companies make only small returns on investment, and quite a few make losses.
Summary of China’s 14th Five-Year Plan
For a summary of the key points and further analysis of China’s goals, see our 14th Five-Year Plan dossier at Table.Talk (German only).
Up-to-date and detailed news, analyses and viewpoints on China's 14th Five-Year Plan are available from China.Table editorial team.
