Beijing released its 13th Five-Year Plan in November, outlining its blueprint for the economy and society for the next five years.
Here are some of the key points:
Innovation in the economic structure is at the core of the plan. It expects innovation to drive China’s growth and transformation into a consumer-led economy. At present, the value created by the service industry is not enough to offset the slowdown in the industrial sector.
But Beijing believes innovation in the structure of the service and consumer industry will be the new growth engine.
The plan also encourages industrial innovation. The government will offer tax incentives and increase investment in high-end industries like information technology, aerospace and maritime equipment, railways, etc.
It also focuses on green industries. Beijing wants to widen the use of non-fossil energy. This will benefit wind, solar and nuclear power sectors and encourage low carbon emission transportation and construction solutions.
China will step up financial reform. Regulators are expected to overhaul the rules on stock and bond issuances to increase the ratio of direct financing for companies.
There will be lower entry thresholds for banking, insurance, securities, elderly care and other industries.
Reform in the renminbi exchange rate mechanism will boost capital markets and promote the internationalization of the renminbi.
On population, the government will promote social welfare and scrap the decades-long “one child” policy to allow couples to have a second child.
Overall, the plan emphasizes balance in economic development.
After getting through the bottlenecks, including high borrowing costs, outdated capacity and bad loans, China is expected to rejuvenate its economy and resume a growth rate of over 7 percent.
This article appeared in the Hong Kong Economic Journal on Nov. 25.
Translation by Myssie You
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