China takes practical approach to development over next five years
- Chinese Premier Li Keqiang cautions against ‘blindly launching’ new projects in favour of scientific assessment and reasonable growth
- Comments signal government has no intention of using ‘old tools’ of investment stimulus to meet latest challenges
China should take a practical approach in its 2021-2025 development plan, setting eyes on a reasonable growth rate and keeping some leeway, Premier Li Keqiang said on Thursday.
While the five-year plan should consider the post-coronavirus economic recovery over the next two years and the country’s 2035 development vision, the No 2 figure of the Chinese leadership called on the use of reformist measures to tackle structural problems in the world’s second largest economy.
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“Development targets must be scientific. They should be encouraging but also have some leeway,” Li told economic planners at a meeting in Beijing.
“We should do what we can and do our best in terms of industrial development, infrastructure construction and livelihood projects. Instead of blindly launching new projects, we must ensure all these planned ones can be accomplished.”
The comments come as Beijing turns inward to support its future growth amid Washington’s containment. In the dual circulation strategy introduced earlier this year, the authorities pledged to expand the domestic market and technologies.
They signalled the government’s intention to avoid investment stimulus, an old tool widely used after the 2008 global financial crisis to lift growth rates. Years of stimulus have led to a skyrocketing of China’s debt pile which poses a severe threat to its financial system.
The next five years will be a key period for China to cross the middle-income trap and catch up with the United States in terms of economic size. The ruling Communist Party’s Fifth Plenum did not specify a growth target for 2025, but put security in a similarly important position with development.
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In his address to the plenum, President Xi Jinping vowed to double gross domestic product by 2035, implying an average growth of about 5 per cent over the next 15 years. China is widely projected to grow about 2 per cent in 2020 and 8 per cent next year.
“Our economic base is already quite large. It would remain a remarkable achievement if we can grow it with a reasonable speed over the next five years,” Li said at the meeting.
He also called for a forward push on institutional opening-up, improving the environment for foreign trade and investment, and strengthening international exchange and cooperation.
The five-year plan, outlined at the plenum, is being fleshed out under the coordination of the National Development and Reform Commission. A draft – containing dozens of quantitative targets on social, economic, technology and environmental fronts – will be published in March, ahead of approval by China’s top legislature, the National People’s Congress.
The authorities have released eight economic tasks for the coming year, including strengthening strategic technological innovation, ensuring the control of supply chains, boosting domestic demand, and ensuring grain security, according to the Central Economic Work Conference that concluded last week.
However, policymakers pledged to continue “necessary support” for the nation’s economic recovery and said they would make “no U-turn”, citing uncertainties over the coronavirus pandemic and the external environment.
