The annual sessions of National People’s Congress (NPC),1 China’s top legislative body and Chinese People’s Political Consultative Conference (CPPCC),2 country’s top national advisory body, also referred to as the ‘two sessions’ (两会 liang hui) are just around the corner. The suggested agenda for the annual session of the NPC includes deliberating a government work report, and examining and approving the 13th Five-year Guideline.3 A short summary called Proposal (建议 ‘jianyi’) on the plan was adopted at the Fifth Session of the 18th Communist Party of China (CPC) Central Committee, which concluded on October 29, 2015 in Beijing. The proposal has attracted worldwide attention and has been translated into seven languages. The proposal was also explained through video to disseminate to larger audience.4 Further, the State Council of China has invited online suggestions not only from its citizens, but experts and people from around the globe to suggest and help the government to finalise the 13th Five Year Guideline.5 This initiative illustrates the importance of public opinion and changing dynamics of decision making in China.
Based on the proposal, China’s National Development and Reform Commission (NDRC) has been assigned to finalize the Five Year Guideline. The outline (纲要 gangyao) of 13th Five Year Guideline would be officially released during the NPC session beginning from March 5, 2016. This paper aims to analyse the main agenda of the two sessions by understanding the ongoing debate in Chinese media and various statements of top leadership of China.
Debate in Chinese Media
It is important to understand the debate in Chinese media about the important agenda of the two sessions as it would help to understand China’s policy objectives. As per Chinese media reports, this is the first time in 25 years that the General Secretary of CPC made a statement on the proposal of Five Year Guideline at the plenary session of the CPC.6 The departure from convention depicts President Xi’s influence in formulating the Guideline to realise the Chinese Dream and the 13th Five Year Guideline reflects Xi’s developmental priorities and embeds his governance philosophy of the ‘four comprehensives.7
The China Daily newspaper has asked for ideas and suggestions for the upcoming ‘two sessions’ through online survey.8 The paper has formulated seventeen themes and asked the public to indicate their preferences on a maximum of six topics for the upcoming sessions. The topics are: i) streamlined administration and decentralization of departments; ii) Macroeconomic regulation and control; iii) Supply-side structural reforms; iv) Finance and tax; v) New pattern of urbanization; vi) Issues of agriculture, farmers and rural areas; vii) Employment and entrepreneurship; viii) Internet plus; ix) Education equity; x)Technological innovation; xi) Health care reform; xii) Social security; xiii) Housing security; xiv) Environmental protection; xv) Energy saving and emission reduction; xvi) Law-based administration of government; and xvii) Anti-corruption.
The People’s Daily, the official newspaper of Communist Party of China, has indentified eight probable agendas which will be discussed at the ‘two sessions’ in March 2016.9 The paper puts 13th Five Year Guideline on top priority for NPC Annual Meet 2016. The second topic, suggested by the paper is poverty reduction campaign. ‘Supply-side structural reform’, first proposed by Chinese President Xi Jinping, is third on the paper’s agenda. President Xi’s ambitious initiative “Belt and Road” is next on agenda. Further, the newspaper expects that possible revision of the charity law will be also on the agenda as the Standing Committee of the NPC has deliberated the draft of the charity law twice. The newspaper emphasises that as most of the tasks of China’s reform in the judiciary system are expected to be completed by the end of 2017 and the Chinese government hopes to improve its capability in maintaining national security and social stability, the reform in the judiciary system may be anticipated. The newspaper believes that as China’s policy to emphasize a balance among production, living environment and ecology wins popularity among the public, green development will be also one of the subjects in the upcoming sessions. Lastly, People’s Daily also lists institutional anti-corruption on the agenda, taking a clue form President Xi’s New Year Message to “create a green political eco-system”.
China Radio International’s (CRI) website has also identified eight important topics for the upcoming sessions. Although, the four topics – 13th Five-Year Plan, the fight against poverty, supply-side reform, environmental protection, and anti-corruption campaign – matches with People’s Daily’s suggested agenda, but CRI lists Chinese Army in a new era and Made in China: 2025, which have been introduced to push forward the transformation and upgrading of the manufacturing industry and improve innovation ability. Further, it mentions Internet Plus, and the ‘community of common destiny’ as other two topics for the sessions.10
In this background, it is pertinent to analyse the main focus of contemporary debate, which will determine China’s development discourse in the next five years.
The 13th Five Year Guideline
The Fifth Plenum of 18th Communist Party of China (CPC) Central Committee affirmed that China will maintain medium-high economic growth in the next five years. President Xi Jinping has stated that "For China to double 2010 GDP and the per capita income of both urban and rural residents by 2020, annual growth for the 2016-2020 period must be at least 6.5 percent."11 Some Experts have also estimated that China might fix a target of about 6.5 percent growth for the next Five Year Plan. Mr Cai Fang, Vice-President of the Chinese Academy of Social Sciences and also a member of the advisory board of the 13th Five-Year Guideline on National Economic and Social Development of China has noted that the average economic growth rate has to be maintained at 6.53 percent for the next five years. However, according to an analysis and study by Cai's team, the potential economic growth will be around 6.2 percent from 2016 to 2020, compared to almost 10 percent before 2010 and 7.6 percent during the 12th Five-Year Plan.
Post-Fifth Plenum, Chinese leadership has provided a direction to the ongoing debate on 13th Five-Year Guideline. At a symposium on the 13th Five-Year Plan, Premier Li stressed the role of innovation in China's 13th Five-Year Guideline, calling for further efforts to foster new growth sources and upgrade traditional ones.12
While presiding over a meeting regarding drafting the outline of the 13th Five-Year Guideline, Premier Li Keqiang, on December 31, 2015, emphasised that the draft work should be in line with new development ideas that promote economic upgrades and social progress.13 The new development ideas feature innovation, coordination, openness and green development. Premier Li emphasized structural reform, especially supply-side reform,14 to create new driving forces and upgrade traditional driving forces through mass entrepreneurship and innovation, urbanization and regional developmental. Premier Li also highlighted that “Internet Plus15” and “Made in China 202516” strategies can promote rapid development of the manufacturing industry, strategic emerging industries, and service industry.17
It is noteworthy that Premier Li Keqiang presided over a symposium on January 26, 2016, to solicit opinions from different walks of society, which included experts from education, science and technology, culture, health and sports circles on the draft of an annual government work report and the country’s 13th Five-Year Guideline. 18 Mo Yan, the Chinese winner of the 2012 Nobel Prize for Literature, proposed that greater importance should be attached to popular science, and promoting public knowledge and etiquette.19 Zeng Yixin, Beijing Hospital suggested promoting joint reforms of the country's medical system, medical insurance system as well as investing greater efforts in developing general practitioners at community level in China.20
In a meeting on February 22, 2016, convened to discuss the draft of the annual government work report and proposals for the 13th Five-Year Guideline, the Political Bureau of the Communist Party of China’s (CPC) Central Committee said that enhancing growth quality and efficiency will be the focus of the Five Year Guideline.21 The leadership also emphasised the development of modern agriculture and green development. Targeting 2016 as a “critical year for China to deliver the country's social and economic targets, the leadership listed the cutting of industrial capacity, destocking, de-leveraging, lowering corporate costs and identifying weak links as major tasks for the year”.22
The Five Year Guideline is a strategic document aiming to steer China’s economic and social development in the near to long term. The Five year Guideline, therefore, reflects China’s commitment to achieve national goals that Chinese leaders have set out. The Five Year Guideline also set policy priorities and guiding political ideologies to determine the direction of Chinese social and economic development.
The 13th Five Year Guideline is the first guideline to be unveiled under President Xi Jinping and the last such guideline before the year of first Centenary Goal. The first Centenary Goal aims to double the 2010 GDP and double the 2010 income of both urban and rural residents by 2020.23 It marks the 100th anniversary of the CPC’s founding in 1921 to complete the building of a moderately prosperous society.24 The second Centenary Goal, commemorating the 100th anniversary of founding of the People’s Republic of China in 1949 is to build a modern socialist country that is prosperous, , democratic, culturally advanced and harmonious. In other words, the first centenary goal is aimed to build a foundation to achieve the second goal.
Fair Distribution of Growth
Significantly, the proposal on the Five Year Guideline in October 2015 pointed out the need to ensure more balanced, inclusive and sustainable economic development and gave emphasis on ‘promoting the coordinated development of urban and rural areas’.
In his New Year speech, Chinese President Xi Jinping provided clear direction about the priority of the government. He said, “It remains a moral and emotional obligation for me to get the tens of millions of rural population out of poverty and to let them lead a decent life. Now the party and the nation have been mobilized to make concerted effort for the victory of the decisive battle over poverty.”25
As of the end of 2014, China had 70.2 million people in rural areas below the poverty line (annual income below 2,300 yuan). President Xi has reiterated that China plans to lift all of its poor out of poverty by 2020. The government plans to increase fiscal expenditure on poverty relief, and private investment and community groups will be encouraged to join the battle against poverty.26
The fifth plenum called for promoting new-type of urbanization in China. The country initiated a new-type of urbanization plan in March 2014. One of the tasks in the Five-Year Plan is to increase the urbanization ratio based on the number of registered residents. That ratio is expected to reach around 45 percent by 2020.27 Chinese experts stress that the Chinese urbanization drive is different from the Western urbanization, as the Chinese plan is to encourage rural people to get settled in small towns rather than creating slums in cities. It is hoped that urbanization can be one of the main drivers of economic growth, as the government attempts to shift away from an investment-based economy. Premier Li Keqiang noted (in May 2013), “Every rural person, who becomes an urbanite, can increase consumption by more than 10,000 Yuan.”28 However, evidence suggests that the urbanization plan might not be very easy to implement as many rural people do not want to leave land and shift to cities.29 Eliminating poverty in rural areas is perhaps the most difficult challenge for China in building a ‘moderately prosperous society’.
Supply-side Reform
Mr Xi Jinping first mentioned the concept of ‘supply side’, (gongjice) in November 2015. However, think-tanks affiliated with government ministries had been promoting the concept since the last two years. There is also a new institute called the China Academy of New Supply-Side Economics.
President Xi Jinping has said that China’s emphasis next year will be on supply-side reform, or a package of supply-side policies to release new demand and boost new productivity. It has been argued that China has relied on three major forces to drive economic growth-investment, exports and consumption, which are classified as the demand side. As the effectiveness of boosting growth in the demand side weakens, the government has started to reform the supply side. The government wants “effective use of production factors, including funds, resources, skilled workers, equipment and technologies.”30
Supply-side reform is the buzzword among Chinese leaders and economists and is expected to be unveiled during the upcoming ‘two sessions’ to address outstanding issues, like “excess capacity, housing overhang, and state-owned enterprises (SOEs) with poor profitability.”31 The need is to overhaul the economic strategies in the era of ‘New Normal (新常态 xin changtai)’32 to realise the first centenary goal of building moderately prosperous society by 2021 as an important objective. It is expected that China will cut housing inventories, tackle debt overhang, eliminate superfluous industrial capacity, cut business costs, streamline bureaucracy and focus on urbanization.33
China’s Central Economic Work Conference 2015 has also emphasised on supply-side structural reform. The conference outlined that in 2016, China will focus on the supply-side to stabilize growth, further liberalize productivity and create new supply sources, optimize the supply structure and improve competitiveness. The conference also highlighted that the government should maintain the intensity of supervision on the market while unleashing the energy of the market. In this way, the growth can be better stabilized through supply-side structural reform.34 Needless to say, the concept of ‘supply side reform’ is in the formative stage, however, the direction of reform is clearly established.
In sum, China is in the midst of rapid transformation with development agenda taking the highest priority. However, it is evident that the economic transformation has also brought various challenges. China’s 12th Five Year Guideline for the period 2011-2015 aimed at the transformation of growth pattern. The most important agenda of this year's session of the NPC is to deliberate and approve the blueprint of China's economic and social development for the next five years, the 13th Five-Year Guideline. The 13th Five Year Guideline for the period 2016-20 aims to rebalance and restructure the Chinese economy and shift to an innovation-driven and green economy mode, while maintaining a medium-high growth rate. The focus on fair distribution of growth and supply side reform is evident now. However, eliminating poverty in rural areas will be a challenge for the Chinese leadership.
***
*The Authors are Research Fellows at the Indian Council of World Affairs, New Delhi.
The Views expressed are that of the Researcher and not of the Council.
Endnotes:
1 The People's Republic of China practices the system of people's congress. The National People’s Congress (NPC) is the supreme organ of state power in China. It is composed of NPC deputies, who are elected according to law from 35 electoral units from the people's congresses of provinces, autonomous regions, municipalities directly under the Central Government, the People’s Liberation Army, the deputy election council of the Hong Kong Special Administrative Region and the Taiwan compatriots’ consultation election council. Each congress is elected for a term of five years. The NPC meets in session once a year. A total of 2,943 deputies will attend the current 4th session of 12th NPC. For details See, http://www.npc.gov.cn/englishnpc/Organization/node_2846.htm; http://www.china.org.cn/english/27743.htm.
2 According to Chinese Sources, the CPPCC is an organization of the united front with wide representation. It is an important organ of multi-party cooperation and political consultation under the leadership of the CPC. It is composed of the CPC, other political parties, mass organizations, and representative public personages from all walks of life, representatives of compatriots of Taiwan, Hong Kong and Macao as well as of returned overseas Chinese and other specially invited people (http://www.china.org.cn/english/chuangye/55437.htm).
3 Since 11th Five Year Plan, the nomenclature has been slightly modified from Plan (计划) to Guideline (规划) to reflect the market oriented economy of China.
4 http://english.gov.cn/news/video/2015/10/28/content_281475221854979.htm.
http://www.nfcmag.com/article/6019.html
7 President Xi Jinping’s “Four Comprehensives” is his governance philosophy to realise the China dream. These are a) to comprehensively build a moderately prosperous society; b) to comprehensively deepen reform; c) to comprehensively govern the nation according to law; and d) to comprehensively strictly govern the Communist Party.
8 http://pub1.chinadaily.com.cn/survey/20150211/2015sessions_pc/index.php.
9 Sun Tianren and Zhang Mengxu, “Eight Topics to Dominate China’s Two Session,” People's Daily, February 29, 2016, http://en.people.cn/n3/2016/0229/c98649-9022705.html
10 Tong Xinxin, “China’s Two Sessions Captures Global Attention,” CCTV, February 26, 2016, http://english.cntv.cn/2016/02/26/ARTIRqJ0z2tIHCoH4ccMsVZ2160226.shtml
11 “Xi Expounds on Guideline for 13th Five-year Plan,” Xinhua, news.xinhuanet.com/english/2015-11/03/c_134780297.htm.
12 President Xi Jinping's New Year Speech 2016, www.china.org.cn.
15 The concept was first used by Premier Li Keqiang and accepted by State Council of PRC on July 4, 2015, the plan aims to integrate the internet with traditional industries and fuel economic growth.
16 “Made in China 2025” plan unveiled on May 19, 2015 by State Council of PRC is the country’s first ten-year action plan focusing on promoting manufacturing. The plan proposed a “three step” strategy of transforming China into a leading manufacturing power by the year 2049, which marks the 100th anniversary of the founding of the People’s Republic of China.
http://en.people.cn/n3/2016/0129/c90785-9011139.html.
19 Ibid.
20 Ibid.
21 “Chinese Leadership Vows Stable Macro Economic Policies to Sustain Growth,” February 22, 2016, http://english.cri.cn/12394/2016/02/22/3381s917647.htm
22 Ibid.
25 President Xi Jinping's New Year Speech 2016, www.china.org.cn.
26 “Xi Expounds on Guideline for 13th Five-year Plan,” Xinhua, news.xinhuanet.com/english/2015-11/03/c_134780297.htm
27 Ibid.
28 Li Keqiang Expounds on Urbanization,” available at http://china.org.cn/china/2013-05/26/content_28934485.htm.
29 This is based on Dr Sanjeev Kumar’s interview with villagers in Baishui county, Shaanxi province, 22-25 December 2013.
31 Song Miou, Supply-side Reform to Keep Chinese Economy Fit, January 4, 2016, Xinhua, http://news.xinhuanet.com/english/2016-01/04/c_134977011.htm.
32 President Xi Jinping’s ‘New Normal’ theory depicts the slow growth rate of Chinese economy after experiencing three decades of two-digit growth rate. President Xi describes that ‘New Normal’ has three features: firstly, the economy has shifted gear from the previous high speed to a medium-to-high speed growth. Secondly, the economic structure is constantly improved and upgraded. Thirdly, the economy is increasingly driven by innovation instead of input and investment. See http://news.xinhuanet.com/english/china/2014-11/09/c_133776839.htm; http://theory.people.com.cn/n/2015/0225/c49154-26594889.html.
33 “Backgrounder: What is China's Supply-side Reform?” Xinhua, December 22, 2015, http://news.xinhuanet.com/english/2015-12/22/c_134941783.htm.
34 Dong Ximiao, “New Signals from Central Economic Work Conference 2015,” January 2, 2016, China Radio International, http://english.cri.cn/12394/2016/01/02/4202s911124.htm.
Annexure
Time Line of Past Five Year Plans/Guidelines of China
1st Five Year Plan (1953-1957) |
2nd Five Year Plan (1958-1962) |
3rdt Five Year Plan (1966-1970) |
4th Five Year Plan (1971-1975) |
5th Five Year Plan (1976-1980) |
6th Five Year Plan (1981-1985) |
7th Five Year Plan (1986-1990) |
8th Five Year Plan (1991-1995) |
9th Five Year Plan (1996-2000) |
10th Five Year Plan (2001-2005) |
11th Five Year Guideline (2006-2010) |
12th Five Year Guideline (2011-2015) |