By HELMUT MATT

THE eyes of the world were transfixed on China last March, and the discussions and reviews there of the comprehensive draft of the country’s 13th Five-Year Plan. Its landmark proposals, which the Communist Party of China (CPC) raised at the end of October 2015, sparked much speculation. The plan was adopted during the annual “two sessions” – the National People’s Congress (NPC) and Chinese People’s Political Consultative Conference (CPPCC) – which convened respectively on March 3 and March 5, 2016 in Beijing.

The cornerstones of this draft, published in advance of the “two sessions,” polarized attention in the international community, especially among pundits harboring high expectations of these reforms. Geared to transforming and perfecting the Chinese economy and to achieving political and social modernization, they imply opportunities and advantages for both China and the world as a whole.

The planned transformation of China’s hitherto investment- and export-driven economic system into a more sustainable and consumption-driven model is of particular interest. Researchers and entrepreneurs alike believe that this change will create a more balanced social structure and better living standards for the Chinese people.

More power to the market and less state investment, and more personal initiative and fewer state monopolies are, in a nutshell, the new concepts that Chinese leaders sought to implement in efforts to deepen reforms. China may now expand its opening-up, so generating a broad range of opportunities for investors from all over the world, not least Germany.

Periodical government consultations are just one feature of the longstanding close and trustful cooperation between China and Germany. The close ties between our two countries provide a solid basis for future development.

A brief glance at Chinese history helps our understanding of the magnitude of China’s progress.

Back to Start 

In 1953, four years after Mao Zedong proclaimed the establishment of the People’s Republic of China, the CPC’s first five-year plan was formulated in revolutionary China under the leadership of the late Premier Zhou Enlai and his deputy Chen Yun. At that time, the country was in the early throes of socialist restructuring.

The focus of the first phase of socialist industrialization was on developing the country’s heavy industry. As, in the 1950s, China was still a fundamentally agricultural economy, the aim was to establish a basis on which to industrialize and protect the nation.

In spite of these initial consolidation measures, economic difficulties nevertheless arose which “New China” needed to tackle. With the help of the former Soviet Union, however, the young country successfully implemented its first Five-Year Plan, and achieved impressive growth.

At that time, nobody dreamed China’s socio-economic development would be such a spectacular success story. Although in its early years the country was beset with difficulties and setbacks, the measures that Deng Xiaoping took in 1978 marked the eventual and crucial turning point.

The success of the carefully implemented steps towards opening-up and further reform were manifest in the stimulus they injected into China’s economy. The unstoppable dynamic that set in a few years later gave rise to the China we know today – a country that plays a leading role among the world’s most important economic powers.

Having adopted last March the 13th Five-Year Plan in the history of the People’s Republic, China once more stands on the threshold of a new stage of development, distinct for its new social, as well as economic quality.

Five-year plans since reform and opening-up came into effect mainly focused on growth and volume. The CPC now pays close attention to the different frameworks of the post-industrial age which influence so many areas.

China’s development as a nation with the world’s largest population has reached a level beyond the limits of past economic paradigms.

Today, China’s development as nation with the world’s largest population has exceeded the limits of past economic paradigms. For instance, the air quality in some regions has deteriorated from a critical to a harmful level, and many big cities in China face the threat of a traffic gridlock. The blessings of growth have thus in many places become threats. It becomes ever clearer just how closely people’s living standards, especially their quality of life, depend on the political and economic decisions of the Chinese government.

At the same time, the CPC has set ambitious goals for the country’s modernization and development, albeit never losing sight of the complicated circumstances from which China evolved. 

The “Two Centennial Goals”

The CPC celebrates in 2021 its 100th anniversary, and the year 2049 marks the 100th anniversary of the establishment of the People’s Republic of China. Against this background, the CPC emphasized during the Fifth Plenary Sessions of the 18th Central Committee, held in Beijing last October, the concept of the “Two Centennial Goals” and the “Four-Pronged Comprehensive Strategies.” The latter comprise: finishing the building of a moderately prosperous society in all respects; deepening of reform; promotion of the law-based governance of China; and strengthening of Party self-conduct. These two ambitious goals form the basis of the 13th Five-Year Plan.

In the lead-up to 2021 and the first of these two anniversaries, the Chinese leadership plans to comprehensively build a society characterized by moderate prosperity. This long-term goal was discussed at the 16th National Congress of the Communist Party of China. 

Implementation of the first “Centennial Goal” constitutes the requirements and foundation on which to realize the second “Centennial Goal” – to develop the People’s Republic into a modern socialist country that is prosperous, strong, democratic, culturally advanced, and harmonious, by the 100th anniversary of the PRC in 2049. The 13th Five-Year Plan is thus the last five-year plan in the first “Centennial Goal” period.

The concept of the “Four-Pronged Comprehensive Strategies” contains one strategic goal and three strategic measures, namely, to “finish building a moderately prosperous society in all respects,” to “ deepen reform,” to “advance the law-based governance of China,” and to “ strengthen Party self-conduct.”

Cornerstones of the 13th Five-Year Plan

Despite a weakened national and international economy, the draft of the new five-year plan is still based upon maintenance of the reduced, but still relatively strong, annual growth of the Chinese economy. The formulated aim is to achieve an average growth of 6.5 percent or above.

Robust growth will be a mandatory requirement for the projected increase of GDP and of the Chinese people’s per capita income in the lead-up to the year 2021. To tackle economic problems, the Chinese government plans to reduce the country’s surplus production capacities and modernize and optimize China’s economy.

This “new normal” implies a slower pace of growth that will enable higher efficiency and better quality. Innovative development of advanced technologies and environmental engineering will add momentum to the Chinese economy, helping the country to significantly improve its people’s quality of life.

Innovation should cover all aspects of economy and society, including industry, technology, the market, commodities, agriculture, administration, and law. The CPC hopes through the 13th Five-Year Plan to make innovation the engine of China’s development and so elevate the country’s economy to a higher level.

The Chinese government must be flexible in view of the current weakness of the world economy. Although in the past foreign trade and commodity exports were the cornerstones of China’s economy, domestic consumption and the accompanying higher standards of living should supersede them as the main focus of China’s economic growth.

These quantitative improvements will be complemented by qualitative measures in the sphere of environmental protection and renewable energies. Measures that have a direct effect on urban air quality, for instance, include the planned increased use of environmentally-friendly, renewable energy, as well as the promotion of electric cars and other low-emission types of transportation.

These steps will undoubtedly have immediate impact on the people’s health and quality of life, particularly in big cities and large economic centers. Green development is indeed a precondition for China’s sustainable development.

It was under the slogan “Beautiful China” that the Chinese government first made environmental protection integral to its comprehensive development concepts of innovation, coordination, green thinking and action, opening-up, and shared economy. The guidelines for industry, agriculture, resource usage, lifestyle, and energy consumption clearly take into account the strong desire of the Chinese people for a better, more beautiful life.

The Chinese government will also do its best through the new Five-year Plan to continue ongoing justice and administration reforms, and will further improve legal security. It has for several years worked closely with international legal experts, among them prominent German lawyers and legal scholars, on the establishment of a system of rules that guarantee a secure rule of law in China. This will be of benefit both to the Chinese people and foreign investors.

Further improvements to intellectual property protection are another part of this package of planned measures. Both parameters – rule of law and intellectual property protection – are vital to international relationships, because they promote mutual trust and hence strengthen the willingness of national and foreign enterprises to invest in China. These measures are complemented by the strengthening of and reforms to the national financial and banking sector.

Other important contents of the 13th Five-Year Plan include qualitative improvement and strengthening of the educational sector, perfected youth skills training, and the development and modernization of rural areas.

A closer look at China’s past five-year plans, and their implementation, leave no doubt that China, present challenges notwithstanding, will successfully execute its new plan.

Impact on German-Chinese Exchanges

China is the world’s second-largest economy, and in the last four years the country has generated one-third of world economic growth. Although the recent weakness of the global economy had impact on China, robust growth can be expected during the years 2016 to 2020 by virtue of the steps formulated in the recent Five-Year Plan. We can assume that, in all probability, China’s economy will continue to function as an important growth engine of the world economy.

As the five central concepts proposed in the 13th Five-Year Plan make clear, China plans to implement innovative, coordinated, green, open, and shared development. This development model will provide a number of opportunities and possibilities, not least for German companies, especially in the field of high-tech and environmental protection.

In the past, there have been many cooperative arrangements between our two countries. As the focus of the Chinese government in the coming years will be on qualitative growth, high-quality products originating in German industry will without doubt be in great demand in the PRC. The Chinese government’s broad range of investment in expanding solar and wind energy, for example, will create diverse investment and shareholding opportunities. The building of new infrastructure and planned modernization of mechanical engineering will also attract German companies to China. Furthermore, the Chinese administration is likely to expect optimum benefits from foreign expertise in the fields of environmental protection and environmental restoration.     

It is to be expected that China’s innovative capacity will bring many opportunities for foreign countries as well as foreign enterprises in our globalized world. The close and friendly relations between China and Germany form an excellent basis for successful cooperation and investments within the frame of Chinese economy. Justice and administration reforms will moreover increase planning security and also provide additional incentives for German companies.

It is moreover to be expected that China will deepen its integration into the international community, and strengthen international exchanges. Promoting foreign language training, international student exchanges, and partnerships between schools, cities, and regions will nurture a profound understanding on an interpersonal level between the German and Chinese people.

There are indeed many ties between our countries. City partnerships have grown steadily over past years. Personal encounters and a growing mutual understanding are the best courses towards creating an atmosphere of trust and mutual respect between countries and peoples. They are hence the most valuable investment for the future. There is no better foundation for bilateral exchanges on all levels!

A beautiful country, healthy people, and a country of peace and security – these are keywords of the plan for the coming five years. It is particularly striking that all sub-concepts are closely interlinked. One precondition for this is that in future the entire economy will be based on innovation, and this reform will cover all economic and social areas.

All in all, the 13th Five-Year Plan of the Chinese government is a forward-looking strategy for the transformation of China’s economy to a higher level of development. It will bring boundless motivation and countless opportunities to countries throughout the world. 

Therefore, I hereby wish for the Chinese government a firm hand in the implementation of its plans, and for the Chinese people the strength they need to realize their dreams.

HELMUT MATT is a well-known German writer and Sinologist.