More than 200 members of the Central Committee sat in Beijing on Thursday when the four-day meeting for the Chinese Plan, the 14th Five-Year Plan, ended. The close amalgamation of the plenum, as pictures in the state media show, symbolizes what the Chinese leadership wants to expand between 2021 and 2025: everyone must pull for one piece. The most important points at a glance.
What does China plan to do?
Beijing’s economic plan states that China will respond less defensively in the future. The aftermath of a global corona pandemic has accelerated this orientation, which has become increasingly important under the head of state and party leader Xi Jinping. The country should become more independent of the rest of the world and at the same time gain more self-confidence.
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Xi wants to achieve this, among other things, by strengthening the domestic domestic market. The Chinese economy is still too dependent on exports abroad, and these could intensify, especially due to the ongoing global corona crisis, making it an uncontrollable risk to Chinese companies.
Therefore, Beijing has been strengthening the technology industry for years, be it cloud services, artificial intelligence or 5G. Any innovation that China can ensure technological dominance is often bureaucratically pushed forward or generously subsidized.
They will no longer be friends: Donald Trump (left) and Xi Jinping. Photo: Nicolas ASFOURI / AFP
Because by 2025, the motto is that the People’s Republic will become “the leading market for high technology.” The decisive factor will be whether, until then, China will be able to produce chips that it has developed in-house and that can serve as a basis for artificial intelligence and autonomous vehicles.
What does this mean for the West?
In recent months, Beijing has had painful experiences with disputes with the US over Huawei, Bytedance or the internet giant Tencent. US President Trump has denied access to US technology to a number of Chinese technology companies and has stopped Bytedance’s TikTok social video platform and Tencent’s WeChat messenger application.
US semiconductors will not go to China in the future, and repressive tariffs, including tariffs on Chinese technology products, and measures to limit the number of Chinese companies on New York stock exchanges have been introduced.
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The “separation” of the two countries does not only mean a shift in supply chains, if at all possible. The trade dispute raises new geostrategic questions. Europe needs to think carefully about where it wants to be when it comes to China and the US, so that it does not become a “toy between China and the US”, as has recently been discussed in the Western media.
Other countries in Asia are being forced by China through the New Silk Road. The compensatory act should be, but must not be, too dependent on loans from China.
Attack on Western financial markets
At first glance, problems such as China’s financial market reform, which is currently being promoted, and the opening of its markets, look as if China is opening up to the world. So far, however, the five largest banks on Wall Street have had only 1.6 percent of their total investments in China and Hong Kong.
Former head of China’s central bank Zhou Xiaochuan once said that foreign competition is helping China advance to the world level, as is the financial industry.
The market in China has recently performed better than in Western countries. Photo: dpa
The first effects didn’t take long. “China’s stock market is doing well compared to global indices,” said economic experts Max Zenglein, Maximilian Kärnfelt and François Chimits of the Berlin think tank Merics in their latest report. “After falling in the first half of the year, shares have now risen seven percent. The Chinese stock market is benefiting from foreign capital inflows, a recovering economy, loose monetary policies and several large IPOs.”
But while the Chinese economy appears to be recovering, it is being consumed with caution. Although technology is the biggest driver, people continue to work mainly in the service sectors, which have almost no contact with innovation there. Although one has come very close to the goal of the five-year plan (2016-2020), which is now coming to an end, to achieve a society with “modest prosperity”, experts do not see this as a guarantee of long-term and sustainable growth.
What growth is expected?
Although there have always been clearly quantified economic growth targets in the last five-year plans, it is unlikely that Beijing will agree to any exact figures this time in the face of the global crisis. After all, analysts expect framework data: “China’s leadership continues to expect economic size, household income and GDP per capita to reach a new milestone by 2035,” said Raymond Yeung, chief economist for China’s Australian and New Zealand banking groups.
“China has not given up on its GDP target, it is only more subtle,” Bloomberg told intelligence. The next five-year plan will be similar to the previous one. In the first and last year, it is clear how quickly and comprehensively the provinces will implement the Beijing specifications.
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And by the end of 2025, we will carry out an inventory. The governors of the province fought each other quickly and again, especially in the first year, only to slow down the pace of implementation a bit when Beijing is no longer looking closely.
However, Xi Jinping has been expanding more and more in recent years, and it will be difficult to think about this in front of Xi’s inner circle of consultants. Pressure on provincial governors will increase, and with it fear, if Beijing’s goals seem unattainable.
Earlier this month, Xi Jinping traveled to southern Guangdong Province, where the main industrial facilities are located. It was once called the “desk of the world.” He repeated Deng Xiaoping’s journey in 1992. This is symbolic, because Deng’s report almost 30 years ago was that China must accelerate its economic opening to the world. Xi Jinping is building on that, but is now calling for technology leadership. The plan is to overtake the West with its own reforms and slowly make it dependent on China.