China's 13th Five-Year Plan and its business implications
The ruling Communist Party of China (CPC) adopted the blueprint for the 13th Five-Year Plan (13th FYP) for 2016 - 2020, at its Fifth Plenary Session of the 18th CPC Central Committee which ended in Beijing on 29 October 2015.
The 13th FYP is the first five-year plan formulated under President Xi Jinping's leadership and considered to be strategically important as the year 2020 will be the centennial anniversary of the founding of the CPC and the deadline for realising China's goal of becoming "a moderately prosperous society in all respects".
This article provides a summary of the eight-chapter, 22,000-word document - the CPC Central Committee's Proposal on Formulating the Thirteenth Five-year Plan on National Economic and Social Development - which sets out the goals, principles and targets for China's development in the next five years, and will have significant business implications, not only for China, but also for the world, given the size and global influence of China's economy.
To achieve the goal, the party has underlined five guiding principles:
Specifically, in the next five years, China aims to:
Achieve more balanced, inclusive and sustainable development by coordinating a range of economic indicators
Maintain medium-high economic growth
Plan better allocation of resources
Raise the efficiency of investment and companies
Promote advanced manufacturing and agricultural modernisation
Become an innovation-driven nation
Keep encouraging mass entrepreneurship
Continue raising the service sector's contribution to GDP
Further increase consumption's contribution to economic growth
Increase the pace of urbanisation
Narrow the income gap, eliminate poverty and improve people's livelihood through expanded public services on employment, education, culture, social security and healthcare
Further open up its economy
Vigorously promote environmental protection and low carbon growth
President Xi Jinping later elaborated that, to achieve the goal, China would need to maintain an average annual GDP growth rate of 6.5% until 2020. This growth rate, coupled with a smooth transition to a growth model primarily driven by consumption and services, will hopefully guide the economy into its "new normal" period and help China avoid the "middle-income trap".