1. The 14th FYP at a glance
How was your weekend?
We spent ours reading through the over 140-page draft of the 14th Five-Year Plan (FYP) for National Economic and Social Development.
Spoiler alert: There weren’t many surprises.
- Back in October, the Party’s recommendations for the FYP set out all the big priorities (see November 4 Tip Sheet).
Interestingly, though, three key targets were adjusted to reflect policymakers’ evolving outlook on the economy:
- There is no annual GDP growth target – allowing more flexibility to adjust economic policy in years to come.
- Expectations for the service sector’s contribution to GDP were lowered – in response to concerns that resources flowing to the service sector, especially property and finance, will hollow out the industrial and manufacturing sectors.
- The digital economy’s contribution to overall GDP is set to hit 10% by 2025, up from an estimated 7.8% in 2020.
National economic security is also a key theme in the 14th FYP – with new mandatory targets on food and energy security appearing:
- Grain production should be over 650 million tons each year
- Domestic energy production capacity should reach 4.6 billion tons of standard coal equivalent (SCE) by 2025
Get smart: Higher quality growth, digital transformation, economic security – these are the key goals that all policies will be geared to achieve over the next five years.
2. Two-pronged tech push
Thirsty for more juicy 14th Five-Year Plan (FYP) details?
- We’ve got a quencher for you.
The FYP emphasized technological innovation as a national strategic imperative and called for developing cutting edge technologies like:
- Artificial intelligence
- Quantum computing
- Genetic research and biotechnology
- Advanced clinical medicine and healthcare
- Deep-space, deep-sea, and polar exploration
What’s different: The references to quantum computing and neurosciences are new, but Beijing hasn’t divulged much info about what these goals entail.
And – oh yeah – the digital economy is set to be a big deal:
- The 14th FYP dedicated a standalone chapter to digital economic development, which was barely mentioned in the 13th FYP.
- The digital economy’s value added to GDP is set to account for 10% by 2025, up from an estimated 7.8% in 2020 (see previous entry).
- The goal is to establish the digital infrastructure for the long-term trend of digitization – through the development of cloud computing, the industrial Internet, and blockchain.
Get smart: China is pursuing a two-pronged approach to tech development, aiming to boost both foundational and advanced technologies.
Get smarter: The goal is clear – achieving both self-sufficiency and global competitiveness.
3. Developing the data market
Hey, where are you going?
- We’ve got even more tantalizing tidbits about China’s evolving tech policy!
The 14th Five-Year Plan also marks a major evolutionary step in China’s thinking on data policy.
The quick version: Solving outstanding issues with data governance — including developing data classification, security, and privacy laws — has been reframed as an economic concern.
In other words: The overarching purpose of data policy is to ensure that data resources can smoothly circulate throughout the economy.
ICYMI: We got a teaser of this thinking back in March 2020, when the State Council officially recognized data as a factor of production, alongside land, labor, capital, and technology.
But, but, but: Unlike land, labor, capital, and technology markets, the data market is not well established.
That means that China will need to move fast to:
- Develop data classification schemes to legally define different types of data
- Release regulations that govern how data can be traded, stored, and used
- Develop methods to assess the economic value of data
- Update national accounting laws so that companies can track the value and depreciation of data
- Break data monopolies by cracking down on big tech
Get smart: The digital economy is the economy. Its soundness will determine the future of China’s growth.
4. Unity is strength
Xi Jinping kept busy as the Two Sessions chugged along this weekend.
Xi held meetings with:
- Chinese People’s Political Consultative Conference delegates from the medical, health, and education sectors
- National People’s Congress delegates from Qinghai and Inner Mongolia
Xi had quite the list of discussion topics for the provincial delegations, including:
- Common prosperity
- The New Development Concept
- Rural revitalization
- Environmental protection
- The need to study Party history and ideology
- National and ethnic unity
He placed extra-special emphasis on that last one (Xinhua 1):
- “[We must] enhance the identification of…all ethnic groups with the great motherland,…the CCP, and socialism with Chinese characteristics.”
Xi also offered some practical suggestions:
- “We should…popularize the national common language and characters, and comprehensively promote the use of national unified textbooks.”
Some context: Inner Mongolia and Qinghai have a large percentage of ethnic minorities. Last year, the former saw protests over plans to phase out Mongolian as a language of instruction.
Get smart: The Party sees pairing economic development with a push for ethnic unity as a solid recipe for stabilizing China’s border regions.
More likely: China’s hardline assimilationist approach to ethnic minorities will breed resentment rather than conformity.
5. Wang Yi’s uncomfortable presser
On Sunday, Foreign Minster Wang Yi gave a press conference on the state of China’s foreign policy.
Wang covered a lot of ground, but we detected a hint of strain in some of his comments:
- Specifically, Wang tried to balance a broadly conciliatory tone with hardline defenses of Beijing’s policy course.
For instance, Wang called for greater cooperation with the US while simultaneously serving up fiery denunciations of American “interference” (Guancha):
- “[T]he United States frequently interferes in the internal affairs of other countries under the banner of so-called democracy and human rights.”
Similarly, Wang touted improved ties with the EU, but vehemently denied that repression in Xinjiang constitutes genocide, an issue which is driving a rising tide of Sino-skepticism in Europe.
- “The so-called ‘genocide’ in Xinjiang is absolutely absurd.”
- “It is a rumor with ulterior motives and a complete lie.”
Wang likewise tried to put a positive spin on Sino-Indian and Sino-Japanese relations, both of which have been recently strained by territorial disputes.
Get smart: China’s diplomats are in a tough position. Domestic sentiment demands the sort of aggressive, uncompromising stances that impedes cooperation and makes Beijing look like the bad guy on the world stage.
6. Mouth of the (Global) South
Foreign Minister Wang Yi’s Sunday press conference (see previous entry) was also notable for the attention he devoted to the developing world.
Rather than engaging exclusively with the usual foreign policy suspects, Wang made specific overtures to the following regions:
- Arab countries
- Latin America
- Southeast Asia
He buttered up his Global South audience with some choice soundbites, such as (Guancha):
- “China is willing to inject new [effort] into the China-Arab strategic partnership.”
- “China will continue to work with Latin American friends to deepen friendship, broaden cooperation, and…better benefit the Chinese and Latin American people.”
Wang repeatedly cited increased trade and investment as proof of Developing World solidarity:
- “The trade volume [between China and Africa] has increased 20 times.”
- “China’s direct investment in Africa has increased 100 times.”
Wang also pointed out China’s contributions in helping the Developing World combat the ‘rona:
- “China…is providing free vaccine assistance to 69 developing countries in urgent need.”
Get smart: Beijing sees itself as a champion of developing countries. It’s an image that policymakers are keen to promote far and wide.
Get smarter: China’s image may be tanking in the West, but it still has plenty of admirers in the Global South.
7. Fool me once…
Over the weekend, proposed reforms to Hong Kong’s electoral system from the National People’s Congress were a hot topic of discussion, worldwide (see March 5 Tip Sheet).
- On Sunday, details emerged of how the sausage was made for electoral system reforms.
It looks like Beijing didn’t give Hong Kong politicians a chance to comment on the legislative changes (Financial Times):
- “‘I am not privy to any thoughts on the part of Beijing officials…maybe they have consulted the top most trusted advisers,’ [said Executive Council member Regina] Ip.”
- “A member of the executive council who advises [Chief Executive] Carrie Lam…said he did not believe any council member had seen a blueprint of the reforms a month before they were due to be announced.”
Why that’s strange:
- “Beijing has traditionally relied on a loose network of pro-China lawmakers, tycoons and advisers to its parliament to help govern Hong Kong, telegraph its messages and to serve as a sounding board for new ideas before they are rolled out.”
Get smart: Beijing believes that trusting PRC-loyalist elites in Hong Kong to deal with opposition forces was one of the blunders that led to the 2019 anti-government protests.
- They’re not gonna make the same mistake twice.