How realistic is China´s new Five-year plan? – Sara Hsu

Slowly the first details of the upcoming new Five-year plan are emerging. A two-child policy, Innovation, green development, opening of the financial markets and better social insurances are on the agenda. Financial analyst Sara Hsu calls them in The Diplomat pretty realistic, because they build on existing plans.

Sara Hsu:

First, China’s leadership has already stated that it would promote innovation, in particular through its “Made in China 2025” program, which seeks to expand the integration of innovation into industrial and services industries. The Thirteenth Five-Year Plan references this program. The impact of technology upgrading within production processes will increase both productivity and profitability of goods and services. This process is essential in catering to a more highly-skilled workforce that now largely balks at taking jobs in the low-skilled manufacturing sector. Higher wages earned by skill-intensive jobs can be used to increase consumption, a major focus of the current administration.

Second, green development has been a general target for some time, although somewhat new objectives within the upcoming Five-Year Plan may enable better success. The proposed real-time online environmental monitoring system can help enforce pollution laws currently on the books. This was introduced in a trial phase at the beginning of 2014, requiring factories to report air emissions every hour and wastewater discharges every two hours, posting the results to the Internet. Also, a strict water management system will place reasonable prices on water and better regulate this increasingly scarce resource. This will enhance a green development program that has thus far focused mainly on developing renewable energy sources and moderately increasing enforcement of pollution laws.

Third, expanding economic activity on the Internet has been a focus within the “Internet Plus,” program introduced by Premier Li Keqiang in March of this year. Internet Plus seeks to integrate big data, the Internet of Things, and mobile internet with manufacturing, and to promote e-commerce. Under this plan, the Internet is to be used to promote innovation and boost the primary, secondary, and tertiary sectors. Much of the growth in China’s Internet industry has been organic, coming from the private sector. Integrating the Internet into regular business processes requires somewhat better coordination, which is what this policy seeks to accomplish.