Plans Are Nothing, But Planning is Everything

Beijing’s upcoming Communist Party conclave will discuss the 14th Five-Year Plan, covering economic targets for the first half of the next decade. The meeting comes amid geopolitical and economic uncertainty, with China’s economy bouncing back from the shock of COVID-19 but facing a far more challenging external environment and threats of decoupling in high-technology industries. There will be few details in the statement issued immediately after the meeting, but a more detailed document with policy guidelines is likely be released in the following week. We see the following elements as the most important to watch:

The presence or absence of a longer-term GDP target. These targets have always featured in past Five-Year Plans, but the days of China doubling GDP every decade are in the past, and Beijing may gain policy flexibility by eliminating a target.

Details on how China plans to implement its “dual circulation” strategy. This could include measures to support domestic consumption and changes to technology and industrial policy goals facing a more hostile external environment. Whether the strategy is primarily focused on import substitution in high-tech supply chains or more conventional consumer-focused stimulus for domestic demand will influence global views of this new policy element.

Environmental and energy policy changes that support Beijing’s recent pledge of carbon neutrality by 2060. The focus will be on whether Beijing adjusts near-term fossil fuel utilization and greenhouse gas emission targets, and sends signals about broader changes to energy policy.

Posted October 26, 2020
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