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May 21, 2022

Coronavirus / Russia-Ukraine

Near future

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News to understand, anticipate, improve the future.

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New Chinese five-year plan: greener, more reasoned, self-sufficient

The new Chinese plan responds to Covid and the cold war with the US. Identical objectives, partly changing the modalities.

Gianluca Ricciodi Gianluca Riccio
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photo of assorted-color Chinese lanterns inside room

Photo by They on Unsplash

November 7, 2020
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Il 14th five-year plan China focuses on the spread of well-being and the capacity for "resilience" in industrial production.

China changes on the run: it is impossible to think that Covid would not have changed the strategies of the People's Republic. The forecasts show a foreseeable setback in the short term that has led the country's leaders to outline a different future in the new Chinese five-year plan.

A different future for China as the future of the planet will be different. A future that could involve more closures than openings, less cooperation and an extreme need to focus on renewable energy.

For this reason, the Chinese five-year plan always counts on the objective of becoming a technological power, but also focusing on general quality and growth in per capita income.

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What do the Chinese need to live like in the West?

Spain has a per capita income level of around € 25.000. Italy a little higher: it has a per capita income level of 28.000 euros. They are countries with GDP growth rates of around 1-2% per year. To reach the same average and widespread level, China would need a per capita income of around 32.000 euros.

China's current nominal per capita GDP is around 10.000.

New Chinese five-year plan

With GDP growth of around 5% per year, China's per capita income will have doubled by 2035. With a parallel rise in the Chinese currency against the US dollar, per capita income would reach the level of 32.000-36.000 euros per capita. understand in 2035.

The Chinese five-year plan wants to get there by emphasizing innovation even more (in sectors that already see a perspective advantage, such as of the AI and homeland security) and the promotion of research and development as a share of GDP. An innovation that however has the matrix of self-sufficiency.

Technology is the key now in China's next development area. It is a key area that China wants to give more attention, more resources and more development to. I think it's basically for China's development in the future.

Wang Huiyao, Chinese cabinet adviser and founder of the Center for China and Globalization.

Whoever does it by himself, does his own thing

The "new cold war”With the United States born from the battle over tariffs and continued with the ostracism towards Huawei and the hardships suffered by ByteDance for TikTok will not improve very soon.

Despite the differences touted by Biden, the next likely US president, the tariffs introduced by Trump may not be eased anytime soon. The United States does not lay down its weapons easily, not even the economic ones, and today more than ever it needs to use all its levers to try to recover from the terrible blow of the pandemic.

This entails the need for Chinese tech giants to prepare to produce what they need themselves, from chips to operating systems.

The Chinese plan envisages a sort of "double channel". One thing that we Italians would translate into the Latin motto “Si vis pacem, para bellum”. Armed with knowledge and production factors: ready for dialogue, but also to do it alone.

Especially by increasing investments and internal consumption.

Other points of the new Chinese plan

Other objectives of the new Chinese plan, which should be concretized in the coming months before the approval by the Chinese parliament next year?

Three central themes: environment, military force, Hong Kong and Taiwan.

Environment
New Chinese five-year plan

The Chinese government, thanks to the country's rapid growth in the renewables sector, has set long-term targets for reducing emissions. This will accelerate the shift to electric vehicles and increase nuclear, solar, hydro and wind power (the latter in China is booming).

Military force
New Chinese five-year plan

The party has established a new Chinese for greater synchronization between economic development and defense. Xi's goal is to build a world-class army by 2049. The communiqué called for speeding up defense modernization and "achieving the unity of a prosperous country and a strong army."

Hong Kong and Taiwan
New Chinese five-year plan
Photo by bady abbas on Unsplash

Reaffirming its commitment to the "peaceful development" of ties across the Taiwan Strait, the new Chinese plan promised to maintain "long-term prosperity and stability" in Hong Kong and Macao as well. 

The statement includes a line calling for the "reunification of the motherland," while a similar document five years ago emphasized economic cooperation and benefits for Taiwanese residents and businesses.

In summary

China has been awaited for crucial years. Years that can mark the passing of the baton as a leading nation in the world.

The new Chinese plan wants to get there by perhaps running in a less exasperated way, but by carefully bridging some historical gaps and the general needs of the population.

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