CHINA (2011-15)

THOUGHTS ON CHINA’S 5-YEAR PLAN

Wen Jiabao has announced China's next five-year economic plan. It's positive sounding, but tough to implement.

Alistair Thornton

The Diplomat, March 6, 2011

In general, this is a positive looking plan. The targets and lofty rhetoric reflect – from our point of view - an accurate assessment of the state of the economy. Prefacing the targets, Premier Wen Jiabao reiterated his long-held belief that the economic structure isn’t ‘well-balanced, coordinated or sustainable.’ Broadly speaking, the targets seek to re-tool the economy, slowing things down slightly in order to enact necessary structural changes. Primarily, consumption needs to rise as a share of GDP. There’s an emphasis on shifting to a healthier type of economic growth, focusing on the quality of growth, rather than just the quantity. This is intended, as Wen put it so nicely, to not just grow the pie itself, but share it around more fairly. It’s also intended to take environmental concerns into consideration.

The first thing to note is that previous plans have pushed in similar directions, to little avail. They sailed past the growth target of 7.5 percent for the 11th Five-Year Plan, whilst President Hu Jintao's whole emphasis on a 'harmonious society' (that is, addressing widening inequalities) has come to little. So, in this respect, the Plan is useful in that it tells us the direction that the government wants to push, but it’s far from certain that this is where they will actually end up.

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