China’s Communist Party (CPC) on Monday began a key conclave of top leaders that will set the direction for the country’s economic policies for the next five years.
The 14th five-year plan (2021-2025) and a longer-term “Vision 2035” blueprint will be in focus at the fifth plenary session, or plenum, of the CPC’s Central Committee, which meets for such sessions once a year.
China’s State media reported President and CPC General Secretary Xi Jinping on Monday delivered a work report at the start of the plenum, attended by the around 200 members of the Central Committee, and “explained a draft document of the CPC Central Committee's proposals for formulating the 14th Five-Year (2021-2025) Plan for Economic and Social Development and future targets for 2035.”
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This is the first such party meeting since the COVID-19 pandemic, and is also the highest-level economic policy meeting held once every five years. The party will likely hold two more such party plenaries, focusing on other themes such as party governance, before its next leadership congress in 2022 when it will choose a new Politburo and Central Committee.
As with the economy-focused plenum five years ago, the current four-day session, being held at the high-security Jingxi hotel in Beijing, will firm up the next five-year plan. The 14th plan (2021-2025), the official Xinhua news agency reported, will "lay out measures to nurture a new development pattern”.
Three themes are expected to be in focus. The first is what Mr. Xi has pushed as a new “dual circulation” model, placing greater emphasis on self-reliance and the domestic market as a driver of growth — a task that has taken on greater urgency against the backdrop of the trade war with the U.S. and the pandemic triggering a collapse in global demand and unemployment problems domestically — while striking a better balance with external demand.
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Rising debt
China’s rising debt problem is another concern, one exacerbated by the pandemic with the government loosening the purse-strings to sustain growth. According to a forecast by UBS, China’s debt-to-GDP ratio is expected to rise by 25 percentage points to 300 percent of GDP this year because of recent measures.
The five-year plan and the 2035 blueprint are also expected to highlight more balanced growth, with a focus on greener development. To meet the target announced last month by Mr. Xi at the United Nations General Assembly for the country to go carbon neutral by 2060, China will need to reduce the share of coal in its energy mix from the 58% as of 2019 to less than 50% by 2025, according to an estimate from Zou Ji, head of Energy Foundation China, reported Reuters.