China's recipe for a 'moderately prosperous society'
Many people blame China for the cooling global economy - whereas once it was seen as the engine of growth, now it is considered the driver of deceleration.
Yet a different perspective is provided by the recent information release about China’s 13th five-year plan or “Shisanwu”. The annual average growth target is only slightly lower than that of the last five-year plan, down from 7 percent to 6.5 percent. If China achieves this target its economy would still enjoy robust growth and double in size by 2020 when compared with 2010.
This is the first plan to be produced under the leadership of President Xi Jinping and it very much bears his imprint. The cornerstone of the plan is building a “moderately prosperous society” which the plan makes clear does not merely mean higher incomes (although this is important) but quality of life. This includes having a cleaner environment – or “ecological civilisation” – balanced wealth distribution, a better social welfare safety net, especially for the elderly, and health reform.
The economic model which aims to achieve these goals covers the familiar themes of shifting away from export-dependence to a consumer-led economy, with less emphasis on industrial development and more on services and consumption as well as reform of the state sector.
However, the main aspect which has attracted interest is the strong focus on innovation and the fourth industrial revolution, characterised by the mobile Internet, the Internet of Things, artificial Intelligence and machine learning.
Another theme in the plan is opening up to the world. The Belt and Road, a major trade route connecting Asia, Europe and Africa, is part of this, as is attracting more international trade and investment into China. As well as further liberalising its financial section, China plans to lower barriers to attract more foreign firms.
So will China be able to achieve these goals? One way of assessing this is to look back at the last plan. In terms of style, it marked a major turning point, as instead of concentrating on headline growth, it shifted towards quality growth and energy sufficiency.
Certainly there has been noticeable progress in achieving these goals. Once known for its cheap low-quality goods, China is now a high-value manufacturer exporting technology, high-speed trains and soon (as mentioned in my last column) airplanes, as well as being a leader in renewable energy.
The whole plan will need to be officially approved when the National People's Congress meets in early 2016; after that we will know more details. But for now we at least have an idea of China’s planned direction and it definitely seems to be positive.
