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China’s new five-year plan continues to protect China from the world

Ella Whitehurst | China Fellow

China’s annual National People’s Congress was brought to a close on the 11th of March. This year the congress was centred around the release of the government’s newest five-year plan, an old relic of the Soviet system. These top-level policy blueprints remain important to the running of the country as they outline the various social and economic development goals. This year’s plan, the 14th to be drafted, primarily focuses on developing scientific and technological self-reliance—a clear manifestation of Beijing’s determination to protect the nation from what it perceives as hostile foreign forces.

In particular, while the plan did not explicitly mention the United States (US), the looming threat of competition that the country presents undoubtably influenced the drafting of this year’s plan. Previous plans focused on how international cooperation could help facilitate China’s economic development. However, the plan this year emphasises the dangers of hegemonism. According to Yang Wei, an advisor for China’s main research-funding body, the straining of the US-China relationship over the past few years has shifted the nation’s focus towards self-sufficiency in order to prevent issues caused by international import restrictions. The volatility of this relationship is a likely factor behind the unusual omission of average yearly economic growth goals, which have been centrepieces for previous plans. This time, goals will be announced annually, dependent on current conditions.

The 2021-2025 plan can be seen as a continuation of Beijing becoming less reliant on Western and, to a further extent, global trade and economies. The plan highlighted the importance of ‘dual circulation’, which was introduced by Xi Jinping last year, will be the guiding strategy for China’s economic development. Under this strategy, Beijing will prioritise establishing a growth model that is based on domestic markets, while still maintaining China’s international presence. In particular, investing in domestic technological sectors was greatly emphasised. Beijing is understandably eager to reduce their reliance on the US and European markets for technological innovation. In 2020, the US placed a ban on exports of high-tech components, such as chips used in mobile phones, to more than 200 Chinese companies and universities. And this trend of decoupling between the two nations does not seem to likely to slow down; just this April two Washington politicians called for Biden to further tighten technology restrictions on China. Overall, this plan sets out an aim for an overall growth of 6% this year, and while this is no small feat in a COVID world, it could be feasible; China was the only major global economy to experience growth in 2020, albeit only 2.3%.

Urbanisation was another main focus, as the government is eager to boost urban migration, which is still lagging behind the high rates of economic growth. Under the plan, it is aimed that 65% of the population will be urban by 2025, compared to 61% in 2019. Nevertheless, this will not be without difficulties: officials in Beijing have recognised the need to relax the hukou system, which currently makes it difficult for rural citizens to migrate to cities. According to the plan, hukou will be combined with a points-based system to encourage the urbanisation of rural populations. Urbanisation, along with the pledge to create millions more urban jobs in 2021, will be determinative factors in achieving domestic growth goals.

The issue of the environment was one that was particularly anticipated by international audiences following from Beijing’s bold announcement that China will achieve carbon neutrality by 2060. While wide-reaching, the aims set out in the plan to implement various indicators for green development are also vague. However, this could just be an indirect effect of China’s decentralised fiscal and governmental systems. Furthermore, the large variation between socioeconomic environments between China’s provinces means that nation-wide policies would be difficult to implement. For this reason, many are waiting to see if regional ministries draft up their own specific targets in the months of come.

These five-year policy blueprints certainly warrant an amount of international focus as they act as a relatively reliable indicator of China’s anticipated economic, political and social development. This year’s plan clearly reflects the changing global environment, and follows on with the current polarisation of politics between China and the West, which continue to teeter on the cusp of becoming more confrontational. The emphasis on domestic self-reliance and lack of specific growth targets indicate that China is anticipating future economic difficulties. Yet, overall, China has made calculative moves with their 2021-2025 plan by making their economic growth more dependent on domestic ‘circulation’, as they will be at less risk of being adversely impacted by the international economic declines and the rising protectionist tendencies in many countries.

Ella Whitehurst is the China Fellow for Young Australians in International Affairs.

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