China’s Communist Party has published a document about the 13th Five-Year Plan.
The 17-page document provides more details about the blueprint for economic growth in the next five years than were found in last week’s terse communique.
Still, it stops short of listing specific targets.
Some are likely to be leaked in the weeks ahead. Others may only be released with the publication of the plan itself during the National People’s Congress in March.
Much in the document is familiar, including calls to accelerate the rebalancing of the economy, move the manufacturing sector up the value chain, promote energy efficiency and expand coverage of welfare services.
Those were also priorities under the 12th Five-Year Plan.
Here’s what’s new and interesting.
China appears to be doubling down on a 6.5 percent growth target, with President Xi Jinping saying it’s critical to doubling 2010 GDP by 2020.
That’s doable in a scenario of successful reform but leaves virtually no room for growth to slow from the current pace.
It also risks opening a growing credibility gap between where the government says growth is and where the market believes it is.
The document calls for orderly realization of yuan convertibility on the capital account.
That would be a significant step, with major consequences for China and the world economy.
The hope is that free cross-border capital flows will improve the efficiency of capital allocation.
Given fears about instability in the financial system, it seems unlikely that China’s markets will be completely open to large-scale volatile portfolio flows on such a short time horizon.
Coverage of urban welfare services would be extended to all residents.
Ending the two-tier citizenship system in which hundreds of millions of migrant workers are denied access to public health, education and other services is a major step forward.
It should expand labor force participation by allowing migrants to extend their working lives in the city.
By reducing the need for precautionary saving, it should also free funds for consumption.
The government will target an urbanization rate of 60 percent by 2020, up from 55 percent currently.
That implies 13 million new urban residents a year.
There’s still juice in the urbanization engine and that’s positive for real estate and infrastructure spending.
Even so, headline numbers can mislead.
Much urbanization in China happens through redrawing of the urban boundary, rather than actual migration of rural residents to the city.
The government is sticking to its objectives on the pace of urbanization despite evidence the pace of migration is slowing.
The views expressed in this article are those of Tom Orlik and Fielding Chen, economists at Bloomberg Intelligence.
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