China's FYP: Reform and Innovation
- Daniel Telele
- Oct 20, 2015
- 2 min read
In November, China's National Development and Reform Commission (NDRC) will release the country's 13th 5-year plan. Recent instability, lagging GDP growth, and questionable future growth estimates have caused shocks across global markets---specifically within commodities---as evident with issues facing Glencoe.
History: China's first FYP (Five Year Plan) was released in 1953 in order to stabilize and plan economic growth.
Purpose: The purpose is to provide an understanding of the government's economic and political policy objectives within the 5-year window. Publication of this plan helps ensure resources are allocated effectively and helps draw investment into particular sectors. For example, the first FYP focused heavily on Agricultural and Industry growth. These are two critical components of establishing long-term stability for an evolving nation, which was the case of China in 1950s. The plan also covers social and environmental policy planning.
Reform & Innovation: Premier Li Keqiang (李克强) leads FYP planning and has chosen to focus efforts on "Reform & Innovation." The Chinese economy has grown significantly over the past 10 years---reaching near 10% annual GDP growth. As a total percent of Global GDP, we can witness China's increasing importance to the global economy. At the same time, we can also find significant social and political change, which has enabled this growth. In response to increasing credibility issues (in terms of reporting economic information specifically) the 13th plan will have a clear long-term objective addressing global concerns.
"The plan should not only focus on the five years and reflect diversified goals for building a moderately prosperous society by 2020, but consider development prospects in the longer term," - Keqiang Comparing the 1st FYPs plan's focus on "Agriculture & Industry" to the 13th plan's focus on "Reform & Innovation,” we find evidence of the maturity of the Chinese economy. It could be argued that the FYP has leveraged this growth. Maturity has also brought along a shifting focus to issues concerning more developed nations, such as Environmental Policy, which will be examined in a later post.
Sources:
http://epi.yale.edu/visuals/china-five-year-plan/
http://www.chinadaily.com.cn/china/2014-09/05/content_18550923.htm
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