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  Approved by the State Council and sponsored by the Development Research Center of the State Council, China Development Forum 2015 (CDF2015) will be held on 21-23 March, 2015 at the Diaoyutai State Guesthouse in Beijing.

As the first large-scale and high-profile international conference right after the National People's Congress (NPC) and the the Chinese People's Political Consultative Conference (CPPCC) in each year, CDF has been sticking to the principle of “Engaging with the world for the common prosperity” and serves as an important platform for Chinese government to carry out candid exchanges and discussions with global business elites, leaders of international organizations as well as foreign and Chinese renowned scholars. Initiated in 2000, CDF has made remarkable contributions for the policy exchange and international collaborations between China and the world.

 

 

 

The 13th Five Year Plan:  Aiming for Balanced Development

 

The 13th Five-Year Plan (2016-20) presented to the joint sessions of the NPC and CPPCC is to come into effect.  It outlines China’s development blueprint and conveys the key areas for major public investments.  The goals in the plan are the key policy drivers for economic management over the medium term.  Set in the context of China’s New Normal Eonomy of moderating growth, the plan emphasizes “balanced development”:  this is mostly about the quality, efficiency and benefits of growth.  It proposecs planned investments intended to uplift the poor, provide a healthier cleaner environment for China to prosper, and to deepen reforms to optimize employment, industry, and new drivers for growth.

 

What does the 13th Five Year Plan Investment Program mean for Foreign Companies?

The National Development Reform Commission (NDRC), the lead agency for the Five Year Plan, sets specific targets on China’s economic growth, social development, and sustainable development goals to guide China’s legislators.  The priorities and targets of the Five Year Plan are also of particular interest for the business models of foreign companies, and the investment proposals are important benchmarks for aligning foreign interests.  The Plan will affect not only the lives of 1.3 billion Chinese, but will also have an important global impact.

 

What are the key targets?

 

Economy

1.  Maintaining a moderately high economic growth rate in the range of 6.5 to 7%.

This is the first time that a band has been set rather than a specific target.  This reflects the government’s efforts to have policy flexibility in managing the economy while at the same time providing the market guidance.  The aim of the plan is to move the growth model towards more balanced, quality growth encouraging new growth drivers and enabling structural reforms to since in to generate more sustainability and a more consumptive led growth model. 

· China aims to double its 2010 GDP per capita income by income by 2020, increasing no less than 6.5%. 

· The GDP is targeted to exceed 90 trillion yuan by 2020.

· The value added of the service sector increases from 50.5% to 56% of GDP.

· The value-added of strategic new industries increases from 8% to 15% of GDP.

 

2.  Adding 50 million new jobs by 2020.

Underpinning the goal of a moderately prosperous society without poverty is the creation of stable employment.  A lower growth rate is less critical than ensuring employment growth. 

 

3.  Increasing labour productivity from 87,000 to 120,000 yuan per person.

As growth moderates, there is an emphasis on creating quality jobs in an effort to improve labour productivity.  This is in line with the attempt to build a more knowledge based innovative economy with new growth drivers. 

· By 2020, Research and Development (R&D) expenditures is targeted to reach 2.5% of GDP. 

· The contribution of technological advancements to economic growth will reach 60%. 

 

Structural Reforms and Infrastructure

4. Deepening policy reforms and infrastructure investments:  strengthening the supply side structure, deepening fiscal reforms, enhancing innovation and new technologies, agricultural modernization, upgrading manufacturing.

In line with moving towards a consumptive led economy, the Plan sets out numerous investment activities which will deepen policy reforms and stimulate new economic growth centers.  This will include fiscal incentives and investments into developing new skills, knowledge based workers, e-commerce, digital platforms, development of service-led industries, and other initiatives to boost competitiveness and carve out new growth centers in the economy.  Investment in economic infrastructure -  transportation, ports, telecommunications, energy - will enhance productivity,. 

· This includes provisions for high speed rail development to expand 30,000 kilometers covering more than 80% of major cities.

· Increasing domestic urban rail transit by 3000 kilometers.

· Construction of 50 new civil airports.

· Expansion and construction of new expressways by 30,000 kilometers

· Construction of 60 million kilowatts of conventional hydroelectric power, and installation of 58 gigawatts of nuclear power by 2020

· Mobile broadband penetration will increase from 57% to 85%, and fixed broadband from 40% to 70%.

 

Deepening fiscal reforms and enhancing debt management between central and local governments will be implemented through new instruments and stronger surveillance to enhance performance.

 

Poverty Alleviation

5.  Lifting 55.75 million people out of poverty by 2020.

Poverty alleviation is a critical agenda for China, to ensure sustainable and harmonious balanced development.  The goal is to lift all above the poverty line, set at an annual income of 2,300 yuan ($354).   Major investments include deepening social protection as well as increasing opportunities through economic development schemes, labour services, assistance to migrants, and social welfare targeted to the poverty-stricken areas.  Child development is also highlighted as having particular importance. 

 

Social Development

6.  Investments in the social sector will expand to ensure social protection and the development of human capital. 

· Children’s Homes will cover 90% of urban and rural communities.

· 40 million migrants will receive vocational education.

· The consolidation rate of compulsory education will increase to 95%

· The gross enrollment rate of kindergarten education will increase to 85%

· The average schooling year of the working age population will increase from 10.23 to 10.8 years.

· Early mortality from chronic disease will be reduced 10%.

· 1-2 country level public hospitals to be available in every county, one standard hospital in every town, one community health service center in each sub-district.

· Primary level health workers to reach 3.5 per thousand; each village clinic to have minimum one doctor.

· Coverage rate of the SIN card to reach 90%.

 

Environmental Protection

7.  Green development: reducing air pollution in major cities by 25% , include PM2.5 target levels, and investments in ecological constructions to reduce water and soil pollution

The Plan highlights pollution control as a major issue requiring significant investments.  Global commitments made by China will be met through reducing carbon footprints and major investments in green technology. 

· Air quality will be significantly improved, with the ratio of fine air quality at prefecture level cities and above to exceed 80%.

· Non-fossil energy consumption is to increase by 20% while carbon intensity is to reduce by 65% from 2005 levels. 

· The accumulated energy consumption per GDP will be reduced by 15% during the Plan period.

 

 

Urbanization

8.  New urbanization development to accommodate 100 million rural Chinese.

To address massive urban sprawl on the east coast, the Plan envisages major investments in new cities and the provision of shelter and social services for migrants and their children.  

· More than 20 million urban shantytown residences will be transformed into decent housing.

· The share of Chinese with urban “hukou” permits will increase to 45%.

· By 2020 it is expected that the urban population of permanent residents will be 60%.

 

 

Continuing to open up the economy.

Alongside domestic structural reforms the Plan envisages a deepening of liberalizing trade and investment, promoting international engagement, and supporting the internationalization of Chinese commerce and industry.  The One Belt One Road initiative, the establishment of the Asia Infrastructure Investment Bank, and the move to increase international trade and investment agreements will strengthen international economic cooperation and coordination, ensuring benefits for Chinese industry, employment, technological spillovers, and intensification of China in global value chains.