Prepa­ra­tion starts on 13th Five-year Plan

Struc­tural prob­lems must be solved to sup­port sus­tain­able growth

China Daily (Hong Kong) - - BUSINESS - By CHEN JIA chen­jia1@chi­nadaily.com.cn

China may be brac­ing for struc­tural slow­down in its 13th Five-Year Plan (2016-20) as the coun­try’s top eco­nomic plan­ner starts its mid-stage as­sess­ment of the 12th Five-Year Plan (2011-15). The anal­y­sis sets the stage for pre­par­ing a blue­print for the next pe­riod of de­vel­op­ment.

Ob­servers said re­search will be get­ting un­der­way this year.

The eco­nomic de­vel­op­ment guide­lines for the five years from 2016 are seen as the key to de­ter­mine whether the tar­get of “es­tab­lish­ing a mod­er­ately well-off and har­mo­nious so­ci­ety” by the end of 2020 can be achieved, they said.

The tar­get was set at the 18th National Congress of the Com­mu­nist Party of China in Novem­ber last year. It also aims to dou­ble its 2010 gross do­mes­tic prod­uct and per-capita in­come for both ur­ban and ru­ral res­i­dents by 2020.

As China’s econ­omy has en­tered into a “struc­tural slow­down”, deep­en­ing re­forms and con­tin­u­ing the open­ing- up strat­egy will be the pri­or­ity for the next five- year blue­print, said Pei Changhong, di­rec­tor at the In­sti­tute of Economics at the Chi­nese Acad­emy of So­cial Sciences.

“The macroe­co­nomic plan should fo­cus on boost­ing do­mes­tic de­mand and solv­ing struc­tural prob­lems to sup­port sus­tain­able growth,” Pei said.

The prepa­ra­tion work for the 13th Five- Year Plan will end in 2015. This year will see em­pha­sis put on re­search­ing sig­nif­i­cant is­sues that re­late to sta­bi­liz­ing growth and en­hanc­ing re­forms.

The National De­vel­op­ment and Re­form Com­mis­sion has re­leased sur­vey ques­tion­naires on its web­site to col­lect pub­lic opin­ion on the im­ple­men­ta­tion of the 12th Five-Year Plan over the past 30 months.

The State Coun­cil the coun­try’s cabi­net em­pow­ers the com­mis­sion to set pro­to­cols and or­ga­nize ways to im­ple­ment the eco­nomic and so­cial de­vel­op­ment plans.

The mid-stage as­sess­ment for the 11th Five- Year Plan started in March 2008, the first time it in­vited three third-party or­ga­ni­za­tions the De­vel­op­ment Re­search Cen­ter of the State Coun­cil, the Cen­ter for China Study at Ts­inghua Univer­sity and the World Bank to pro­vide as­sess­ment re­ports.

The mid-stage as­sess­ment will in­flu­ence the di­rec­tion of the next plan, ac­cord­ing to an­a­lysts.

Lu Zhongyuan, deputy head at the De­vel­op­ment Re­search Cen­ter of the State Coun­cil, a govern­ment top think tank, said the next plan should con­sider a struc­tural slow­down in the medium to long term.

“But the aver­age GDP growth rate from 2016 to 2020 can still main­tain 7 per­cent,” he said. “The growth rate is not a prob­lem for China.”

How­ever, it is more dif­fi­cult to up­grade the growth pat­tern and deepen struc­tural re­forms.

In 2016, the launch year of the 13th Five- Year Plan, growth in the la­bor force in China is ex­pected to stop, which means the con­tri­bu­tion made by pop­u­la­tion growth will be zero, ac­cord­ing to Lu.

In the sec­ond quar­ter of this year, GDP growth in the world’s sec­ond-largest econ­omy slowed to 7.5 per­cent from 7.7 per­cent in the first quar­ter. The whole-year growth in 2012 was 7.8 per­cent.

A re­search note from No­mura Se­cu­ri­ties Co Ltd pre­dicted growth will con­tinue to slow to 7.4 per­cent year-on-year in the third quar­ter, fall­ing to 7.2 per­cent in the fourth.

“The cur­rent pol­icy eas­ing helps to mit­i­gate down­side risks but is not strong enough to boost a sharp re­cov­ery in growth,” said Zhang Zhiwei, chief econ­o­mist in China with the Ja­panese se­cu­ri­ties com­pany.

Qu Hong­bin, chief econ­o­mist in China with HSBC Hold­ings Plc, a Bri­tish fi­nan­cial group, said the fall­ing range of the po­ten­tial GDP growth may have been “over­stated”.

“Be­cause the la­bor force will stop grow­ing in the fu­ture, it will, at the very least, drag down the po­ten­tial growth rate by 0.5 per­cent­age points,” Qu said.

Qu said the cur­rent econ­omy is run­ning be­low its po­ten­tial growth rate which still re­mains above 8 per­cent.

CHEN ZUO / FOR CHINA DAILY

A bridge over the Yangtze River un­der con­struc­tion in Wuhan, Hubei prov­ince. It will be the eighth Yangtze River bridge in the city and is ev­i­dence of on­go­ing in­fra­struc­ture de­vel­op­ment. The coun­try is mak­ing prepa­ra­tions for draft­ing the next five-year eco­nomic de­vel­op­ment plan (2016-20), which may put em­pha­sis on boost­ing do­mes­tic de­mand.

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