China, Inc: five-year plan falls short on changing state’s role in economy
Strong government intervention set to stay in economic activities, dragging on efficiency, US researchers say
President Xi Jinping hopes to rebalance China’s economy but will find this hard without rebalancing relations between the state and market, a US scholar said after examining the country’s 13th five-year plan.
“This is really Xi Jinping’s plan,” said Scott Kennedy, one of two authors of a report entitled “Perfecting China, Inc” by the Centre for Strategic and International Studies in Washington.
“But the fact that he appears to be much stronger or influential [than his predecessors] … doesn’t necessarily mean this is a better plan,” Kennedy said. “It still reflects his strong commitment to micromanagement.”
“This is a plan for rebalancing the economy, but it doesn’t [strike a] balance between the state and market,” Kennedy said, adding that strong government intervention will remain in social and economic activities, making it hard for China to truly boost economic efficiency.
The latest five-year plan was endorsed two months ago by the largely ceremonial National People’s Congress, making it final and official, after two years of drafting.
The full version has been published on government websites.
While the plan’s most important item is achieving a minimum annual economic growth rate of 6.5 per cent by 2020, the blueprint covers many other aspects of innovation, welfare and the environment.
The “new normal” and “supply-side reform”, two of Xi’s vaguely defined strategic economic concepts, are also highlighted in the plan.
Unlike rigid production plans adopted by the former Soviet Union, the mainland’s newest five-year plan was more of general guideline to overcome “the middle-income trap” and to present a blueprint for the country’s future, Zhang Xiaoqiang, a former vice-chairman of the National Development and Reform Commission, said on the sidelines of the NPC.
“The Soviet Union took a plan as law, but our 13th five-year plan [is concerned with] macro guidance,” Zhang said.
While the document acknowledges China’s economic woes and the need to change, “this ambitious vision is not matched by a commitment change in the role of the state”, wrote Kennedy and co-author Christopher Johnson.
This ambitious vision is not matched by a commitment change in the role of the state
The plan is “a strategy to improve the current system – to strengthen China Inc – not to transform it,” the two researchers added, referring to China’s state-led growth model.
Lifting social and economic control has been partly sidelined by the government’s emphasis on economic, cyber and national security and strengthening the Communist Party’s rule.
Kennedy said the leadership headed by Xi should be “a little bit more confident in society” to allow a more liberal environment for different social actors to work together to make the country’s growth leaner and greener.
