Xi's Master Five-Year Plan

Adjusting to the New Normal

Strategic Communications

April 14, 2016

Xis Five Year Plan

On the last day of the annual Lianghui (Two Session), China’s National People’s Congress delegates almost unanimously approved the 13th Five-Year Plan (2016- 2020). For all intents and purposes, the Plan is Xi Jinping’s plan: for the first time in approximately three decades, the original briefing on the draft was given by the President himself at the Party’s Fifth Plenum, rather than by the Premier.

Its context is the new normal, a phrase first used by Xi in 2014 to describe China’s economic status quo. Positioned as an active economic transition, the new normal denotes three changes in the Chinese economy: a gearing down of China’s development speed from high to medium-level growth; a shifting focus from industrial production and manufacturing to services; and a focus on innovation and consumption as drivers of growth rather than investment and exports.

China’s Five-Year Plans are not action plans. They are instead intended as broad sets of overarching social and economic development guidelines to direct policy-making and resource allocation at all levels of government. In doing so, the Plans are also intended to induce companies – state-owned and private alike — to re-orient their strategies and focus their investments in line with promoted industry sectors and priorities.

Xi’s ‘master plan’ is designed with the overarching goal of developing China into a “moderately well-off society” in mind. To do this, the government has again set a hard target for the country’s GDP growth. Annual economic growth for the coming five years should average at least 6.5 percent, a goal that would see a doubling of China’s GDP and per capita income between 2010 and 2020. While the range underscores an appreciation of the need to sacrifice some of the speed of growth to restructure the economy, discarding hard GDP targets would likely have instilled greater confidence amongst those wanting to see evidence that the reform agenda was to take precedence over growth.

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