News Analysis: Strategic changes in China’s 12th Five Year Plan

“A feast for the people!” “A brilliant shift in strategy!” These are some of the encomiums that the Chinese media have heaped on the just-ended meeting of the Chinese Communist Party Central Committee, writes Willy Lam.

The annual conclave of the most powerful 365 men and women in China have endorsed the 12th Five-Year Economic and Social Development Plan which covers the years 2011 to 2015. During the October meeting, the CCPCC also appointed Vice-President Xi Jinping to the concurrent post of Vice-Chairman of the Central Military Commission, thus ensuring the 57-year-old Fifth-Generation politician’s succession to the post of party general secretary and state president two years later.

While the Xi promotion has grabbed the most attention of the international media, the 12FYP may have more lasting impact on China’s development.

The coming five years will be crucial to the country’s quest for superpower status.
Full details of the 12FYP won’t be announced until the annual meeting of the National People’s Congress in March next year. But the communiqué issued at the end of the Central Committee session has indicated the leadership’s determination to make relatively radical realignments to the priorities of development.


The first major change is that instead of just aiming for national strength, more weight will be given to fumin, or “building up the people’s wealth.” The Communiqué indicated that the party would “lay more stress on the ‘putting people first’ principle,” and “put more emphasis on securing and improving people’s livelihood [so as] to promote social equality and justice.”

Other foci of the 12FYP include encouraging consumer spending as a locomotive of growth instead of relying solely on exports and government investment.

Thus the Central Committee pledged to “quicken the pace of establishing a new growth pattern that is jointly driven by consumption, investment and exports.”

More attention will be paid to raising the technological level of industry and agriculture, especially those in central and western regions. The plenum also underscored the imperative of developing low-carbon sectors for the purpose of attaining a “resource-saving and environment-friendly society.”

The Central Committee plenum being one of the rare occasions when all the top representatives from China’s 31 major administrative districts gather in Beijing, it is not surprising that each regional “warlord” tried hard to grab maximum benefits for his jurisdiction.

ABF media

The focus of the jockeying for position is the nation’s fourth “growth pole.” For the past 20 years, three areas – the Pearl River Delta, the Greater Shanghai Region (including the provinces of Zhejiang and Jiangsu), and the Bohai Region (encompassing Beijing, Tianjin and parts of nearby Hebei and Liaoning Provinces) – have absorbed the bulk of the central leadership’s attention and investments.

While the fourth hotspot will be in the hinterland, there is intense rivalry among Chongqing, Chengdu and Xian as to which city should hog the limelight. Sources knowledgeable about Central Committee deliberations say all three cities should be able to split the mega-billion yuan outlays that will be devoted to the fourth growth nexus.
Moreover, partly to promote political stability among the Uighurs, the far-west Xinjiang Autonomous Region will also benefit from extra investments especially from coastal cities and enterprises.

Given that the finishing touches are still being put to the 12FYP, a number of respected experts have offered views on the most crucial element of “returning wealth to the people.” Veteran reform theorist Chi Fulin noted that systems and mechanisms must be introduced to ensure that “economic growth will satisfy the interests of the great majority.”

“We must adjust the distribution mechanism of national income, and speed up [relevant] institutional reforms,” said Chi, who heads the Haikou-based Chinese Reform Research Institute.

One popular proposal is that Beijing ensures that income for workers and farmers grow at the same clip as the GDP. This is in view with the much-noted fact that for the past two decades, the GDP share of laborers’ wages has gone down by at least one percent a year.


One area where the plenum has apparently failed to tackle is reforms concerning state-held enterprises, especially the long-delayed restructuring of the 129 yangqi, or central-level conglomerates that enjoy monopolies in sectors including oil and gas, banking and insurance, transport and telecommunications.

Since the yangqi has been accused of taking advantage of their special prerogatives to make fat profits, putting an end to their monopolistic powers is deemed a key to the achievement of distributive justice.

In 2009, yangqi made profits of 815 billion yuan (A$125 billion) – up 17.1 percent from the previous year – despite the global financial crisis. This year, the four centrally-held banks made on average 1.4 billion (A$214 million) yuan a day.

Even the official People’s Daily pointed out recently that “the people are paying more attention to how are the profits [of yangqi] are being distributed and used.” “When can the entire people enjoy the profits reaped by the state-held enterprises?” asked the Party mouthpiece.

Official coverage of the plenum has no word on the leadership’s views on the value of the yuan – and related trade disputes with the United States and Europe. However, the Central Committee pledged to “enthusiastically take part in global economic governance and regional cooperation.”

It also vowed to “further raise the level of the open-door policy and improve the foreign-trade structure.” Hopes are therefore raised that as Beijing is putting more emphasis on consumption as a pillar of growth, trade fiction with developed countries will be minimized.

How fast consumer spending will grow depends, in turn, on whether the party can make good its promise of substantially raising the income of workers and farmers. 



Join Australia-Asia Forum
receive newsletter & our event promotion

"*" indicates required fields

This field is for validation purposes and should be left unchanged.