China to Prioritize Innovation and Social Welfare for Next Five Years

China’s 14th five-year plan released . . . 

China’s 14th Five-year Plan (FYP), known as the master blueprint charting the country’s policy priorities in the next five years, was passed last Thursday at the National People’s Congress at the end of its annual session. The draft plan consists of 65 chapters and provides details on the strategies to be adopted to meet China’s economic and social development goals. It sets both near- and long-term objectives through 2035. To the surprise of many, this latest FYP excluded a specific GDP target for the first time and said instead that growth rates will be “maintained within a reasonable range and set as appropriate for the year.”

Tech self-reliance, social well-being top agenda . . .

The plan emphasizes innovation-driven growth and self-reliance in high-tech sectors. It lists seven “tech frontiers,” including artificial intelligence, quantum computing, integrated circuits, life sciences, and technologies for aerospace, underground, and deep-sea explorations. To boost its innovation capabilities, China says it's aiming to increase investment in basic research to at least eight per cent of all state and business research and development expenditures. Another listed priority is ensuring “common prosperity” and equal development, which is tied to the increasing weight given to social well-being targets in education, health care and elderly care, and the relaxation of household registration restrictions for migrant workers.

A more inward-looking China?

A key message from the 14th FYP, resting on President Xi’s concept of “dual circulation,” is that the country is looking to devote more energy to addressing persisting domestic issues, including structural reform and inequality. Pundits noted the rather conservative and less quantitatively-focused approach Beijing appears to be taking in managing its economy, as evident in the 14th FYP and Premier Li Keqiang’s recent Government Work Report. Such a policy shift could eventually impact how China positions itself on the world stage and its trade relations as countries chart paths towards economic recovery.