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The communist leadership’s four-day deliberations on the new five-year plan began behind closed doors in Beijing on Monday. In the context of the trade war with the US and the global economic recession caused by the corona pandemic, the second-largest economy is striving for greater independence from the rest of the world.
The plenary session of the Central Committee of the Communist Party marks the course of the new economic plan. It will apply for the years 2021 to 2025 and will be formally approved at the annual meeting of the Popular Congress in March next year. The focus is on a realignment, which the leader of the party and the state, Xi Jinping, describes with the slogan “dual cycles”.
The new strategy aims to strengthen its own technological innovation and make China more independent in the face of the trade and technological conflict with the United States. It is something like Beijing’s response to US considerations about “decoupling” from China. In addition, behind the plan is once again the prolonged strengthening of domestic demand in order to reduce dependence on exports and susceptibility to shocks.
Great mistrust
The US sanctions have gotten Chinese tech giants such as smartphone and telecom equipment maker Huawei, chipmakers, and internet companies like TikTok or WeChat into trouble, and thus have shown their vulnerability. Experts see behind the conflict the growing rivalry between the ailing superpower the United States and the rising Asian power China.
China’s leadership believes that if Democratic presidential candidate Joe Biden wins the Nov.3 election over incumbent Donald Trump, tensions will persist. Behind this lies a deep-seated suspicion “because China is growing very fast, perhaps beyond expectations, ideas or the extent to which the developed world accepts,” Vice Foreign Minister Qin Gang recently told reporters. “We are catching up quickly … That makes some countries like the United States nervous.”
Whether the party’s high-level decision-making body will set an economic growth target at its meeting on Thursday is also being followed with particular interest. The expiring five-year plan had set 6.5 percent as its average annual growth target. Due to the great uncertainty caused by the pandemic, the People’s Assembly had not decided on a goal for this year at its meeting in late June.
Look even further to the future
Given that China is now largely under the control of the coronavirus, it is likely to be the only major economy to see growth this year. After a sharp drop at the beginning of the year, the Chinese economy again grew 4.9 percent in the third quarter compared to the same period a year earlier. Experts also assume that China’s economy is likely to grow by about five percent annually for the next five years.
The plenary will continue to look to the future and formulate general goals for the next 15 years. Although China wants to promote self-employment, its own research and development and domestic demand, the leadership in Beijing has repeatedly stressed that the doors to investment and capital from abroad will not be closed. President Xi Jinping recently spoke of a “new open economic system.”
