China’s government on Friday announced a 6% growth target for 2021 and unveiled a five-year plan and vision for 2035 that aims to expand China’s global footprint as a major technology power.
The plans, unveiled at the start of the annual week-long convening of the Communist Party-controlled legislature, the National People’s Congress (NPC), outlined a push for China to consolidate the positions of its supply chains in key strategic industries, amid a push from some countries towards decoupling, and to significantly increase China’s spending on research and development (R&D) to achieve self-reliance in key high-tech sectors.
Chinese Premier and second-ranked leader Li Keqiang presented the draft government work report for the year and the draft outlines of the 14th Five-Year Plan (2021-2025) and long-range objectives for 2035 to the NPC, which will approve the documents over the next week. The NPC is also expected to approve a major overhaul of Hong Kong’s electoral system that will see a diminishing share for directly elected legislative seats, dealing a blow to pro-democracy parties and strengthening Beijing’s control.
Mr. Li outlined as two major economic targets for 2021 a GDP growth of “over 6%” and the creation of over 11 million new urban jobs. China last year did not announce a growth target amidst the pandemic. The figure, he said, had “taken into account the recovery of economic activity”.
The target suggests an expectation of continued economic revival in China. The economy contracted in the first quarter of last year because of the pandemic but recovered to grow 2.3% in 2020, the only major economy to avoid a contraction.
Mr. Li still flagged “grave challenges” in the global economy as one obstacle, as well as several domestic problems such as impediments to consumer spending, “serious budgetary deficits” faced by local governments and “formidable tasks in forestalling and defusing risks in the financial sector” with ballooning debt a major concern.
The Five-Year Plan (FYP) for 2025 for the first time did not mention annual growth targets, instead announcing an ambitious annual target to increase R&D spending “by more than 7% per year”. The NPC will also approve a plan for “long range objectives through the year 2035”.
President Xi Jinping said last year the country could double its GDP by 2035, pushing China towards becoming a $30 trillion economy. While there is no official target to do so, that would require 4-5% growth annually.
Both plans have emphasised self-reliance and a focus on high-tech growth. The FYP said China “will take self-reliance in science and technology as strategic underpinning for national development” and “will focus on the development of strategic emerging industries including information technology, biotech and new energy”.
It said China “will implement a series of forward-looking and strategic major national sci-tech projects in frontier fields of artificial intelligence, quantum information, integrated circuits, life and health, brain science, gene technologies and clinical medicine.”
Both plans also push Mr. Xi’s “dual circulation” approach, that calls for a better balance between the domestic market, or internal circulation, and trade, or external circulation, as drivers of growth. The FYP said China “will give priority to domestic circulation, and work to build a strong domestic market and turn China into a trader of quality.”
Among the initiatives mentioned in the FYP and 2035 outline was for Tibet “to build an important passageway opening to South Asia”. China has been pushing the construction of a “trans-Himalayan” corridor to Nepal, under the Belt and Road Initiative. It said China would also construct a "Polar Silk Road" and "participate in pragmatic cooperation in the North Pole" and "raise its ability to participate in the protection and utilisation of the South Pole". In 2018, China released a white paper outlining plans to create new shipping routes via the Arctic.
Besides the economic plans, the NPC this week is also expected to approve sweeping new changes to Hong Kong’s electoral system. Mr. Li on Friday said China “will resolutely guard against and deter external forces’ interference”. A draft decision on “improving” Hong Kong’s electoral system was submitted on Friday to the NPC.
The plan is likely to bestow greater powers on the largely Beijing-nominated 1,200 member Election Committee that chooses Hong Kong’s Chief Executive. A push for universal suffrage and to directly choose the Chief Executive was among the demands of the 2019 protests.
Hong Kong only directly votes for half of its 70 Legislative Council members. Under the new plan, Hong Kong media reported, the size of the council could be increased to 90 with the additional members chosen by the Election Committee. This would decrease the proportion of directly elected members and further dilute the presence of pro-democracy parties. On account of the changes, September’s polls in Hong Kong, which were delayed from last year because of the pandemic, could be further pushed to 2022.
Wang Chen, vice chairman of the NPC Standing Committee, said the move was to plug “clear loopholes and deficiencies, which the anti-China, destabilising elements jumped on to take into their hands the power to administer the HKSAR”.
He said the political principle of “the administration of Hong Kong by Hong Kong people with patriots as the main body” would guide electoral reforms in Hong Kong, a change, in the view of Hong Kong’s pro-democracy parties, from “the administration of Hong Kong by Hong Kong people” that was seen as a bedrock of the “one country, two systems” model.