The 14th Five-Year Plan of the People’s Republic of China: Understanding the Communiqué of the 5th P by Antall József Tudásközpont

ANTALL JÓZSEF RESEARCH CENTRE

THE 14TH FIVE-YEAR PLAN OF THE PEOPLE’S REPUBLIC OF CHINA: UNDERSTANDING THE COMMUNIQUÉ OF THE 5TH PLENUM OF THE 19TH CONGRESS AND THE BLUEPRINT FOR THE NEXT FIVE-YEAR PLAN NORBERT MIKLÓS

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THE 14TH FIVE-YEAR PLAN OF THE PEOPLE’S REPUBLIC OF CHINA: UNDERSTANDING THE COMMUNIQUÉ OF THE 5TH PLENUM OF THE 19TH CONGRESS AND THE BLUEPRINT FOR THE NEXT FIVE-YEAR PLAN NORBERT MIKLÓS

INTRODUCTION China has unveiled the blueprint for its 14th Five-Year Plan at the end of October 2020. As it usually is the case at such high-level meetings, a communiqué has been released, which contained highlights of the four-day gathering. President Xi Jinping, who is also the general secretary of the Chinese Communist Party’s Central Committee, delivered the party’s work on behalf of the Committee’s Politic Bureau. The document outlined details of the new Five-Year Plan’s growth strategy, called the “dual circulation”, that is supposed to guide the policies in the coming years.1 The government has also drawn up its vision until 2035, which is the deadline to achieve the so-called “socialist modernization”. Since 1953, the country has outlined its development priorities in such Five-Year Plans (FYP). The end of 2020 marked the end of the 13 th FYP, while the 14th FYP will come into effect from 2021.2 The Plenum which started at 26 October and lasted till 29 October rolled out the new five-year economic development plan, but it had some interesting additional long-term plans as well. The longer-term development plan discussed together with the new FiveYear Plan is such a historically unusual phenomenon, that different interpretations of them have already emerged. One is that the long-term development plan must be a simple, elongated approach towards a more comprehensive development timeline, while the other is that Xi Jinping, the Secretary General of the Chinese Communist Party, intends to remain in charge for the long run. Since he has no apparent successor, as it will be discussed in the later chapters, the second claim does not seem too far-fetched. More than 300 members of the party’s Central Committee attended the plenum, the top leadership of the nation. On the last day a communiqué was announced, that summarized the key points of the meeting and the blueprint for the next Five-Year Plan. As China began its rebound from the shock of the COVID-19 pandemic during the autumn of 2020, the plenum will certainly give a reason for the leadership to celebrate.3

China Communist Party plenum kicks off in Beijing. BBC News. 26 October 2020. <https://www.bbc.com/ news/world-asia-china-54626091 > Accessed: 25 January 2021.

Challenges, goals and proposals from China's ruling party plenum communique. CGTN. 30 October 2020. <https://news.cgtn.com/news/2020-10-29/19th-CPC-Central-Committee-concludes-fifth-plenary-sessionUZ8ZC4kHhm/index.html > Accessed: 25 January 2021. 2

3 Coping with Covid-19 in differing ways. Eurler Hermes Global. 9 July 2020. <https://www.eulerhermes.com/ en_global/news-insights/economic-insights/Coping-with-Covid19-in-different-ways.html > Accessed: 25 January 2021.

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The aim of this article is to find out what path China’s leadership envisioned for the country, alongside with the potential plan for development in the near future, thus giving a summary of what policies can be expected as the 14th Five-Year Plan gets its approval in March 2021. The research material included both perspectives, ranging from Western-based China research institutes and opinions of experts, along with the official Chinese perspective, and the thoughts of main leader figures of the party, so that a more complete picture can be formed for the conclusion.

THE PLANNING PHASE The way China has been planning its development is by creating sets of pathways for how the economy, society, agriculture, manufacturing, etc. should be run, which is called a FiveYear Plan. Just like in every other socialist country that has ever existed, the FYP has to go through a planning phase, after which there is a draft created, that is presented at the 5th plenum of each presidential term, and is finally approved the next year, after which the implementation begins. Naturally, there are other important milestones in a presidential cycle as well, and in China, there are seven of those to be exact. These pre-scheduled meetings, which are called plenums, take place during the entirety of a presidential term. For example, the first plenum of the 19th National People’s Congress of the People’s Republic of China took place in October 2017,4 at which the top leadership elections happened. The second plenum was organized in the spring of 2018, where the Congress discussed high-level issues that remained unsolved during the first plenum. The third took place in the autumn of 2018, when major economic issues were on the table, then, a whole year later, the next plenum directed and adjusted party governance during the autumn of 2019. The fifth plenum took place at the end of the autumn of 2020, where the main topic was the next Five-Year Plan and the path for future development. The sixth plenum will take place in the autumn of 2021, where the discussion will revolve around military issues and the party governance, after which in the autumn of 2022, the seventh plenum will occur, where the outgoing Congress takes its leave and prepares for the next incoming Congress. Of course, there might be lingering topics that need to be discussed at a later date, or important ideas that cannot wait for a Five-Year Plan to be implemented. The plenums are mostly formalities, since the real planning and decision-making has mostly been already carried out by the ones in power. This is why some anti-China researchers and experts sometimes call the National People’s Congress the rubber stamp5 of the party. Nevertheless, this ensures a nice and cyclical way of conducting governance and setting up policies for the long run. When there are other important decisions to be made or new ideas to be implemented, those can be announced separately, and if they are important enough, the policies might just get their own program, just like President Xi’s Chinese Dream did, as we will see later. 4 OCT 2020:5th Plenum of The Party’s Central Committee. TheChinaAgenda. <https://www.thechinaagenda. com/oct-2020-5th-plenum-of-the-partys-central-committee > Accessed: 25 January 2021.

How China is ruled. BBC News. <http://news.bbc.co.uk/2/shared/spl/hi/in_depth/china_politics/government/ html/7.stm > Accessed: 25 January 2021. 5

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The FYPs are the policies which guide the development of the nation. This means, that there can be specific set of objectives for each five-year period, or maybe even for a twoterm presidency, as it usually was the case in China for the past couple of decades, so that the continuity can help achieve the goals set by the top leadership. Moreover, the plenums can be just as important instruments for the party to conduct their policies, as the FYPs are. The reason behind that is that, since the grandiose meetings are so popular, even a person standing next to someone can carry quite a lot of meaning. As an example, usually at the beginning of the second term, the leader of the party usually stands next to his chosen successor, which has been the case since Jiang Zemin was the president, but at the beginning of Xi Jinping’s second term, there was no apparent successor standing next to him. From this, and of course the 2018 constitutional amendment about demolishing of the two-term limit,6 which was at the time of the mentioned plenum not yet in sight, analysts concluded that Xi Jinping is not ready to step down after his second term, and that he intended to keep his power even after his 2017-2022 presidential cycle.7 There are several reasons for that conclusion, but just mentioning the main ideas behind Xi not wanting to step down is that firstly, he spent a very long time consolidating his power and getting rid of his opposition inside the party. Secondly, he wants to secure his legacy as China’s modernizer, and thirdly, because if he steps down leaving behind such stormy international opposition, his plans might not be carried out the way it has been envisioned by the top leadership. This makes it easier to understand, why the communiqué of the Fifth Plenum of the 19th Congress mentions that the current development must continue with Xi at the helm,8 which means that he has all the power necessary to keep his place as president even after his second term is up, probably presiding over the full transformation, or until he dies.9

THE 13TH FIVE-YEAR PLAN: STEPPING ON THE PATH OF MODERNIZATION Since the previously mentioned continuity is such an important factor for the party’s leadership, when observing the blueprint for the new Five-Year Plan, we must take the previous FYP into account as well. This is important, because the said continuity could mean, that the new FYP is building upon the one before it, or even reinforces the set strategies. It might come as no surprise, when considering the fact, that the complete modernization of a nation cannot be done in five or even in ten years. The time window for the 13th Five-Year Plan was between 2016 and 2020. The planning started when Xi Jinping was already in office, since his first term began in 2012, which gave

David Bandurski: INSIGHTS FROM THE FIFTH PLENUM. China Media Project. 29 October 2020. <https:// chinamediaproject.org/2020/10/29/insights-from-the-fifth-plenum > Accessed: 25 January 2021. 6

China votes to allow Xi Jinping to rule for life. Financial Times. 11 March 2018. <https://www.ft.com/content/ bc8ab2bc-24fe-11e8-b27e-cc62a39d57a0 > Accessed: 25 January 2021.

8 China’s Fifth Plenum: Confidence in the Path. Brunswick Group. November 2020. <https://www. brunswickgroup.com/media/7814/brunswick-china-briefing-2020-11-fifth-plenum-in-review.pdf > Accessed: 25 January 2021.

Shannon Tiezzi: China’s Fifth Plenum: What You Need to Know. The Diplomat. 29 October 2020. <https:// thediplomat.com/2020/10/chinas-fifth-plenum-what-you-need-to-know-2/ > Accessed: 25 January 2021. 9

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him and his circle quite a lot of time to create a plan for the modernization of the economy, the society, and for other domestic policies. At the time, when the Chinese Communist Party started the implementation of the 13th Five-Year Plan, analysts thought that the realistic objectives set by the top leadership could indeed achieve the goal of shifting China’s overall economy towards an innovation-based economy.10 The implementation began in 2016, which was a year after Xi Jinping’s plan for his Chinese Dream and the Rejuvenation of the Chinese Nation was put into action.11 The announced plan to build an innovation based economy and thus to move up on the global value chain, whilst becoming a stronger and greater nation is definitely an ambitious one, but nonetheless not unlikely to happen, when it is in accord with the planned development path. Alongside with the previously mentioned plans for certain areas of development, two centenary goals have been set for 2021, the 100th anniversary of the Chinese Communist Party, and 2049, the 100th anniversary of the People’s Republic of China. The flashpoints for the two centenary goals were to create a “moderately well-off society” by 2021, and to once again emerge as a global superpower by 2049. And this is where the 13th FYP comes into play. The 13th Five-Year Plan’s main goals were to promote innovation, green development, e-commerce activity, broader social insurance, further economic opening up, and the reform of the existing financial markets.12 As mentioned before, now it is quite visible, that the FYP was built upon, and even reinforced the previous policies, for example the Chinese Dream, even extending them in some cases. When taking the amount of funds that China can allocate to such projects into account, alongside with the apparent dedication of the leadership, the 13th FYP’s goal become almost easily achievable. The innovation-driven development was based on the Made In China 2025 campaign, which was introduced in 2015,13 with almost the same baseline goals as the 13th FYP. This reinforces the previously mentioned continuation and extension of policies in the Five-Year Plans. The fact that the Made in China 2025 program was included in the FYP meant that there will be even more focus on the integration of innovation in the industrial and service industries in China, whilst highlighting the importance of the impact of technology upgrading. The aim here was to create a more highly skilled workforce so that the people of the nation can help China raise its GDP and earn more money in order to increase domestic consumption, thus setting the stage for the “new normal” term. By these standards, the “new normal” means that by adjusting to the lower GDP growth of the country, China will have to shift from its export-oriented and soaring GDP growth,

Sara Hsu: China’s Next Five-Year Plan: Realistic Objectives? The Diplomat. 7 November 2015. <https:// thediplomat.com/2015/11/chinas-next-five-year-plan-realistic-objectives/ > Accessed: 25 January 2021.

Matthias von Hein: Xi Jinping and the 'Chinese Dream'. Deutsche Welle. 5 July 2018. <https://www.dw.com/ en/xi-jinping-and-the-chinese-dream/a-43685630 > Accessed: 25 January 2021.

Katherine Koleski: The 13th Five-Year Plan. U.S.-China Economic and Security Review Commission. 14 February 2017. <https://www.uscc.gov/sites/default/files/Research/The%2013th%20Five-Year%20Plan_ Final_2.14.17_Updated%20(002).pdf > Accessed: 25 January 2021. 12

Elsa B. Kania: Made in China 2025, Explained. The Diplomat. 1 February 2019. <https://thediplomat. com/2019/02/made-in-china-2025-explained/ > Accessed: 25 January 2021.

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to a more moderate growth target of around 4-6%14 and stimulate domestic spending to boost the economy further, so that it will be sustainable in the future. The green development was a new set of objectives in the 13th Five-Year Plan. The goal was to enable the nation to achieve more success in the field of renewable energy. The realtime online environmental monitoring system was supposed to help enforce the existing environmental laws, while there was further focus added on the renewable energy source development and the implementation of pollution laws. The increased social insurance was also in accordance with the first centenary goal. The more-or-less universal health coverage, which existed in China, fell short of major medical expenses, which led to many Chinese citizens, especially in rural areas, to save up much more money than they usually would, just in case higher medical expenses are due for serious injuries. The 13th Five-Year Plan was supposed to cure this problem, and the way for that to be achieved was to provide people medical insurance coverage for serious illnesses, by which 50% of such illnesses will be covered.15 An improvement was planned for the pension system as well. From the beginning of 2015, 8% of an individual’s salary was taxed to be used as elderly insurance fund. That way, the Communist Party wanted to create a feasible system for the pension of the constantly aging population, suppressing the “demographic time-bomb” as it is sometimes referred to. Since the elderly population is constantly rising and the active workforce is shrinking, which were two of the consequences of the one-child policy being in place for almost 40 years, China will need to implement further strategies to address its aging population.16 Another important goal for the 13th Five-Year Plan was to improve the capital markets and RMB convertibility in order for the nation and its currency to join the IMF reserve basket of currencies. This sort of step was similar to a certain previous plenary meeting of the CCP, the 3rd Plenum of the 18th Central Committee to be exact, where major economic issues were on the table. In the end China opened up the capital account for companies and banks in the Shanghai Free Trade Zone, alongside applying other financial market opening measures in 2015, which led to the financial reforms that transformed the Chinese market to a more liberalized one. But that liberalization still required market reforms in order to be properly implemented, thus the focus on the issue in the 13th FYP. As it will be visible in the next chapter, the steady pace of such reforms will continue according to the 14th Five-Year Plan’s blueprint. In the end, most of the reforms proposed by the 13th FYP were already underway before the implementation of the said FPY started, but after the plan has started working with exact budgets and strategies to achieve the set goals, the development gained even more momentum.

Fergus Green and Nicholas Stern: China’s “new normal”: structural change, better growth, and peak emissions. In: Policy brief June 2015. Gantham Research Institute on Climate Change and the Environment and Centre for Climate Change Economics and Policy. June 2015. 10. <https://www.lse.ac.uk/GranthamInstitute/ wp-content/uploads/2015/06/China_new_normal_web1.pdf > Accessed: 25 January 2021.

Hsu 2015.

Factbox: Key details from fifth plenum of China's Communist Party. Reuters. 29 October 2020. <https://www. reuters.com/article/us-china-politics-plenum-factbox-idUSKBN27E1XY > Accessed: 25 January 2021.

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Of course, we have to highlight the fact, that the FYPs nowadays are viewed more as estimated goals instead of hard targets that need to be hit. Nevertheless, it might come as no surprise that it is almost certain that the Communist Party is almost always going to meet its set goals in the future, just as it did in its 13th Five-Year Plan, at least on the domestic level. The goals of both the previous and the coming FYPs are in accordance with the aim of restructuring China’s economy, in order to move the country up on the global value chain, thus making the nation’s economy one that is based on intelligent manufacturing, services, and consumption, instead of the previous economic model that made China the “factory of the world”.17 From the beginning of the 13th FYP until the end of 2020, and even at the beginning of the 14th FYP, it seems as though there is a continuity of a sensible pathway. From where the country stands after the 13th FYP period, if China truly manages to achieve the goals set by the new Five-Year Plan, it is more than likely that the nation will indeed manage to turn itself into a global superpower by 2049, if nothing stands in its way. But of course, as it is mentioned in the next chapter, even the 14th FYP highlights a “complicated international situation,” that might at the very least make it harder for China to achieve its objective.

UNDERSTANDING THE COMMUNIQUÉ: STEADILY MOVING FORWARD After understanding the goals set by the previous Five-Year Plan, this chapter will focus on the initial ideas and the strategies for the near future of China. The communiqué published after the 5th Plenum at the end of October 2020 provided a high-level overview of the core priorities of the new Five-Year Plan. The goals of the plenum set by the Central Committee of the Chinese Communist Party (CCP) were to evaluate the 13th Five-Year Plan, to set forth the concept of the 14th Five-Year Plan and to finalize its blueprint, to assess the domestic policies, and to evaluate China’s place in the world. Among all these important subjects, the main topics during the plenum revolved around the economic hardships of the nation caused by the COVID-19 pandemic, the worsening bilateral relations with the U.S., and the setting of long-term goals of Beijing amidst the changing world order.18 The evaluation of the 13th Five-Year Plan went quite smoothly. The leadership announced that the goals of the previous FYP have been met, after which they announced that China has managed to reach the status of a “moderately well-off” society just before the end of 2020.19 The eradication of extreme poverty in China was a self-defined concept, since the poverty threshold was set by the party at around USD 350 yearly income, which is almost only the half of the currently accepted international standard of USD 693.20 The cash

Jinyue Dong: China | Understanding the 14th Five-Year Plan and the 2035 long-term development target. BBVA Research. 11 November 2020. <https://www.bbvaresearch.com/en/publicaciones/china-understandingthe-14th-five-year-plan-and-the-2035-long-term-development-target-3 > Accessed: 25 January 2021.

MERICS China Industries Briefing- October 2020. Merics.org. 3 November 2020. <https://merics.org/en/ briefing/merics-china-industries-briefing-october-2020 > Accessed: 25 January 2021.

Tiezzi 2020.

China in 2021: agenda setting, anniversaries, and potential for conflict. Merics.org. 10 December 2020. <https://merics.org/en/briefing/china-2021-agenda-setting-anniversaries-and-potential-conflict > Accessed: 25 January 2021. 20

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payments and relocations by the Central Government have helped many people raise above the USD 350 poverty line, but many households still remain financially unstable, especially in rural areas. Now, that the pandemic hit China quite hard, never mind the positive GDP figures at the end of the year, many people are without a job, which will lead to the average Chinese citizen to struggle with keeping their annual income stable. The loss of jobs and the pandemic together created a dire need of restructuring the supply-side measures of China. At the end of 2020, Xi Jinping announced the dawn of a new era of “moderate prosperity,” as the country reached one of the most ambitious milestones ever set by a government, and eradicated absolute poverty. In addition, according to the Xi himself, China will soon manage to hit the CNY 100 trillion GDP mark, which amounts to almost USD 15 trillion.21 Besides the measurable economic growth, according to the official data in China, the government raised 55.75 million out of extreme poverty, and created 60 million jobs in urban territories in the last five years alone. One more highlight was the improvement of the health care system with basic health insurance coverage now made available to 1.3 billion people, alongside with the improved pension system, that is now accessible to over 1 billion people.22 These achievements have further reaffirmed China’s socialist system, since there has been a visibly significant progress made by the party. With the first centenary goal achieved a month earlier than the set deadline of 2021, the leadership can focus on achieving the next grandiose centenary goal: becoming a fully developed nation by 2049, by which date China is to have basically realized “modern socialism” and reached the per capita GDP level that of a fully developed nation. The achieving of positive growth in 2020 is a serious accomplishment, since China has been the only major country, which managed to do so. By these measures, the GDP is supposed to exceed the USD 14.2 trillion mark, that adds up to a total of approximately 1.9% growth in 2020.23 While this leads to China missing its deadline of doubling its 2010 GDP by 2020, the discrepancy is only by quite a small margin. As China has managed to eradicate extreme poverty, even if it is by their own standards, the nation has achieved a “moderately well-off” society. The next goal set by the communiqué is becoming “moderately developed” by 2035, by which date the per capita GDP of China must be raised to the level of a “moderately developed” nation. In order for that to happen, there must be an annual growth rate of at around 5-6%, which seems manageable, even if we consider the slowing growth of Chinese GDP in the past couple of years.24 It will be certainly interesting to see, how

21 Challenges, goals and proposals from China's ruling party plenum communique. CGTN. 30 October 2020. <https://news.cgtn.com/news/2020-10-29/19th-CPC-Central-Committee-concludes-fifth-plenary-sessionUZ8ZC4kHhm/index.html > Accessed: 25 January 2021. 22 Jude Blanchette and Scott Kennedy: China’s Fifth Plenum: Reading the Initial Tea Leaves. Center For Strategic & International Studies. 30 October 2020. <https://www.csis.org/analysis/chinas-fifth-plenumreading-initial-tea-leaves > Accessed: 25 January 2021.

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the COVID-effect comes into play, and how China will manage the shrinking economy, and step-up its production to achieve at least a constant 5% growth for the next one and a half decade. After the evaluation of the 13th Five-Year Plan, the focus of the communiqué shifted towards the domestic issues. As the leadership acknowledged some lingering problems, like the growing income-gap between rural and urban residents, environmental issues, and the lack of so-called quality innovation, the main topics of the next Five-Year Plan have been set. The focus on high-quality development has been highlighted, with an emphasis on shifting towards a quality growth model instead of the previous model that is obsessively focused on quick growth at any cost. That is certainly a shift away from the previous FYP’s goal of doubling the 2010 GDP by the end of 2020, since there has been no implicit growth target set in the 14th FYP, at least not yet, leaving room for flexibility. Nevertheless, it seems quite certain that the numbers game is much less significant now than in the past. Instead, according to the document, China would aim to achieve a healthy and sustained economic development by 2025, meaning that China is supposed to reach a USD 30,000 per capita GDP, that is three times more than the current level.25 This is certainly in accordance with the mentioned focus on green development, but it is also important to underscore the significant plans for the improvement of quality and efficiency of manufacturing in the future. According to the blueprint, the 14th Five-Year Plan builds upon the above mentioned success of policies for the next five-year period, and even further. With innovation still at the core, regional coordination, green development, and economic international openness are continuously important factors, just like social equality, which goals are all aligned with the pursuit of further alleviation of poverty. Another very important part of development was strengthening the domestic economy, so that the constantly growing middle-class can become a stable consumer base in the Chinese society, generating more GDP for the country domestically, thus helping to achieve the shift away from the export and cheap labor-oriented economic structure of the past. Evidently, this depends on multiple factors, like the growing wages, a more structured social security net, or the improvements of the rural economic capacities. In order to make that happen, China needs to lean towards a quality rather than a quantity-focused mindset even more, which is aligned with the goal of the leadership to become an independent innovation-driven economy, that must come at a price of almost total restructuring of the existing economic model, with parts of the social model as well. For example, in order to encourage the population to start consuming more, China needs a properly functioning social security safety net, to avoid people saving up for sudden serious medical expenses. During the previous FYP period, the government has already done something of this caliber, when

25 Dorcas Wong: What to Expect in China’s 14th Five Year Plan? Decoding the Fifth Plenum Communique. China Briefing. 12 November 2020. <https://www.china-briefing.com/news/what-to-expect-in-chinas-14th-fiveyear-plan-decoding-the-fifth-plenum-communique/ > Accessed: 25 January 2021.

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it announced the 50% coverage of serious medical illnesses.26 A program similar to that can be expected in the future as well. Improving the quality of manufacturing, cyber capacities, and e-commerce activities all require serious funding, as well as well-planned and executed steps in order to be effective long-term. This brings up the question then, how does China plan to reach “socialist modernization” by 2035? All these ambitious goals and the allocated funding seem effective on paper, but it really is more about the implementation than the planning. But before moving ahead, one must notice the unusual title of the new Five-Year Plan, which is “CCP Central Committee-Formulated Proposal for the 14th Five-Year National Economic and Social Development Plan and 2035 Long-Term Goals”.27 The name of the document in itself is already quite irregular, since the previous FYP was named “CCP Central CommitteeFormulated Proposal for the 13th Five-Year National Economic and Social Development Plan”.28 The first difference between the two plans is that the 14th FYP name is quite obviously a different take on the conventional practice, since the name of the document now includes the so-called “2035 Long-Term Goals”. This kind of a long-term component was never seen before in a Five-Year Plan, which is supposed to set the pathway of development for the next five years. The grandiose 2035 deadline can be explained by it being aligned with the other important dates of 2021 and 2049, which are the deadlines for the two centenary goals.29 When considering the “Long-Term Goals” and the two other dates combined, it becomes quite visible, that the 2035 goal is a quasi-halfway point between the two centenaries, for which oddity, there can be a few reasons. The first and most important one, as many analysts conclude, is the fact that Xi Jinping will certainly not want to give up his power at the end of his second term, but would not be sure to live to see how the 2049 goals pan out. In this sense, there had to be a way for him to oversee the future of the transition of China, so the leadership created this midway point between the two centenaries in 2035, at which date the nation must have accomplished most of its ambitions already, thus leaving only the final steps for the coming president.30 This gives the current president a comfortable medium between the two centenary dates, at which point China should have “basically achieved” becoming a modern socialist country, which terminology can seem quite ambiguous at first. The main goal here is the achievement of major breakthroughs in key technologies in order to put China in a leading position of the world. This is in line with reaching a lifestyle standard that of the developed world, creating a country that has “basically achieved” modern socialism. The key components for that are developing a green economy, improving the

Fang Hai–Eggleston Karen–Hanson Kara–Wu Ming: Enhancing financial protection under China’s social health insurance to achieve universal health coverage. BMJ. 2019. 365:l2378. <https://www.bmj.com/ content/365/bmj.l2378 > Accessed: 25 January 2021. 26

（受权发布）中国共产党第十九届中央委员会第五次全体会议公报. Xinhuanet.com. 29 October 2020. <http:// www.xinhuanet.com/2020-10/29/c_1126674147.htm > Accessed: 25 January 2021. 27

28 中华人民共和国国民经济和社会发展第十三个五年规划纲要. Xinhua. www.gov.cn. <http://www.gov.cn/ xinwen/2016-03/17/content_5054992.htm > Accessed: 25 January 2021.

Wong 2020.

Tiezzi 2020.

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quality of the environment, the increase of per capita GDP, and the decrease of discrepancy between rural and urban society. What is needed for these goals to happen is a serious and thorough economic reconstruction, whereby the Chinese Communist Party must take the leading role, according to the blueprint.31 As the restructuring is so obviously necessary, Xi Jinping announced the so-called “dualcirculation”. Even though, this phrase does not have a comprehensive definition yet, from what Xi Jinping said, there are a few straightforward takeaways. Dual-circulation will put its focus on developing the domestic market first, which is one of the main topics of the 14th FYP, thus creating GDP growth driven by domestic demand.32 The purpose of the betterment of the domestic market is that the country will be able to handle economic shocks more resiliently, which will be achieved by China focusing inwards to boost its local markets and domestic demand with new supply-side reforms. This works in tandem with the international cycle, that is based on foreign trade and investment, in order to continue to open and improve the wellestablished global trade capacities of the country, thus further supporting the international export markets. One more important thing aligned with the dual circulation is the repurposing of the export-focused production capacities, such as connecting the poorly developed inland highway and railroad systems to the already mature coastline infrastructure system.33 This leads to an inward shifting tendency, which seemed necessary for some time in China to keep its economy moving forward.34 In order to achieve all these goals, the government must integrate the domestic cycle with the international cycle by optimizing the market layout, trade methods, commodity structure, and modern logistics system, creating a place for investing with the new phrase “in China, for China” in mind.35 The next important aspect of the further development is the continuation of the economic opening and reform. This seems necessary, in order to continue attracting more foreign investment to China, but for that to happen―according to the leadership―China must continue to open its markets across more fields and on deeper levels, leading to a “high-standard market system” and “new steps in reform and opening”. The blueprint for these reforms include fiscal, taxation, and financial reforms in order to create an improved and fair competition with proper market supervision capabilities and oversight.36 Apparently, it is regardless of the domestic cycle’s focus of boosting demand, since according to the blueprint’s reasoning, this focus would further create greater market opportunities for the rest of the world as well. The leadership also emphasized the market’s “decisive role” in the allocation of resources to maximize efficiency, as well as the importance of rural development. As 31 MERICS China Industries Briefing- October 2020. Merics.org. 3 November 2020. <https://merics.org/en/ briefing/merics-china-industries-briefing-october-2020 > Accessed: 25 January 2021.

Wong 2020.

Tristan Kenderdine: China’s Fifth Plenum: Old Goals and Shifting Priorities. The Diplomat. 4 November 2020. <https:// thediplomat.com/2020/11/chinas-fifth-plenum-old-goals-and-shifting-priorities/ > Accessed: 25 January 2021. 33

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the CCP diminished extreme poverty at the end of 2020, the leadership also underlined its goal to reduce the earnings gap between rural and urban citizens. The revitalization of rural areas needs to happen in order to further stimulate domestic demand, and there is also a major investment project that can be expected during the next five-year period to focus on “new urbanization” to battle the development gap. The aim here is to improve and modernize the countryside, in order to make rural residents become a real consumer base for the domestic economy. During the plenum, several highlighted investment areas have been announced, such as roads and railways, ICT networks alongside with e-commerce logistic networks and hubs. Nevertheless, urbanization is set to continue, but as the government noticed the extreme overpopulation of the already large Chinese cities, they created certain countermeasures for those problems. As small and mediums cities, which accept the migrant workforce from the countryside to their social security systems are being subsidized, the Hukou reform could gain a new momentum in the coming future. The leadership also mentioned a “breakthrough” on property rights reforms too. As all land under the communist rule is basically the property of the government, dealings with property can be inherently disadvantageous for rural land holders.37 These changes include the right for the local governments to take away private lands with little compensation and even less legal debate, which is not a major change from how this problem was usually solved before. The only major change is the decreased rights that people have against the government, which raises the question of the “breakthrough’s” effectiveness, and whether It will result in a real change in property systems. As mentioned before, innovation is still the centerpiece of all development, which shows the continuous transition from producing cheap and labor-oriented goods to creating an economy based on high-end and specialized production.38 The technological development and self-reliance in science has become a “strategic support for national development”,39 according to the leadership, the high rate of investment to research and development in the last couple of years is not too surprising. Even more investment can be expected to achieve the so-called “technological independence” amid the constantly growing tensions with China’s major technology provider, the US. The new 2035 deadline is supposed to be the time, when China will have achieved major breakthroughs in core technologies, in order to build upon that momentum and to become an innovative superpower by the 2049 centenary. The longterm innovation goals remain mainly tech-oriented, with the emphasized “core technologies” likely to include semiconductors, telecommunication, big data, and Artificial Intelligence. All these factors are crucial for China to become a global leader in innovation and to achieve “new industrialization, informatization, urbanization and agricultural modernization”.40 There has also been a commitment shown towards green development by the leadership,

Tiezzi 2020.

Wong 2020.

To the next march, what to expect from China's development strategies through 2035? Xinhua. en.people.cn. 7 November 2020. <http://en.people.cn/n3/2020/1107/c90000-9777635.html > Accessed: 25 January 2021. 39

Tiezzi 2020.

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as it still is a main focus of the new development projects. An acceleration of green policies can be expected, as well as buildup of new expertise in green tech in the following years. As Xi Jinping emphasized China’s commitment to green development, he has definitely shown his desire of stepping to the forefront of global green development. He pledged to achieve the peak of CO2 emissions by 2030, and set the deadline for China to become carbon neutral by 2060.41 These ambitious goals can sound far-fetched at first, knowing that China has been responsible for more than 27% of global carbon emissions in 2017.42 Nevertheless, it is a more than welcome step, not just by the Chinese population, but by the world at large as well, since at the plenum, the leadership announced further acceleration of green and low-carbon development, whilst also focusing on improving the environmental quality and enhancing the stability of the ecosystem.43 There is also a greater focus on the real economy, with the administration concentrating on ensuring fiscal policies that support the real economy of China. This means, that the government intends to maintain tight control over China’s housing markets to stop highrisk speculation and to try to control the growth of other speculative financial instruments. On the basis of the recent achievements of the CCP, the expansion of social security is a high priority on the agenda. Building on the foundations of the largest social security system on the world, certain efforts are still necessary to create a more complete multilevel social security safety net, that includes a more comprehensive health system and can consolidate and expand the gains of the successful poverty alleviation campaign. The COVID-19 pandemic helped in enhancing certain social security aspects of the country, since the party heightened the emphasis on public health and disease prevention with specific objectives. The rebalancing of medical resources and the strengthening of the construction and management assessment of public hospitals are just a few important things that must be highlighted from the list.44 After focusing on the domestic agendas, the point shifted towards the international sphere, where China faces a “complicated international situation”.45 During the Trump presidency, the US has been the biggest external uncertainty for the Chinese Communist Party, which is why this rivalry is set to define the years ahead. Now that there is a new president arriving in the White House in January, the Chinese leadership may have certain hopes and expectations of the coming president, but so far it seems that Biden will be just as hard on China as Trump was. Nevertheless, the Chinese leadership thinks that time is on

Steven Lee Myers: China’s Pledge to Be Carbon Neutral by 2060: What It Means. New York Times. 4 December 2020. <https://www.nytimes.com/2020/09/23/world/asia/china-climate-change.html > Accessed: 25 January 2021. 41

42 Hannah Ritchie–Max Roser: China CO2 Country Profile. Our World in Data. <https://ourworldindata.org/co2/ country/china?country=~CHN > Accessed: 25 January 2021.

Tom Baxter–Yao Zhe: The 14th Five Year Plan: what ideas are on the table? China Dialogue. 7 August 2019. <https://chinadialogue.net/climate/11434-the-14th-fiveyear-plan-what-ideas-are-on-the-table/?gclid=CjwKCAiA25v_BRBNEiwAZb4-ZbkorR_ PRMFLwh8BXy1CF2je0Qkcbz1jASlEwhmE8BsHOGUpru7qzxoCsh0QAvD_BwE > Accessed: 25 January 2021.

Wong 2020.

Kenderdine 2020.

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China’s side, but is still prepared for the battle over technology and security in the coming decades. The new style of international cooperation envisioned by the Chinese leadership plans for a multipolar geo-economic world, based on high-level openness and the usual winwin cooperation often cited by China.46 All in all, China seems to be prepared for a serious competition in the future, but as it is on its way to become a major power, it seems that China is also prepared for more than just that. As the communiqué called for efforts to ensure that China is “prepared for war,” this seems like a stark turn towards the expected peak of tensions. An interesting factor here, is that the last time war preparations were mentioned in a Five-Year Plan was in the 1960’s47, but to be sure, this readiness is not at grave as it sounds. This kind of language has been part of the official discourse among the leadership since 2017, and it mostly about the steady continuation of the modernization of the military, which is high priority for the government. The reasoning behind this is the fact, that the modernization is the key to ensure the comprehensive strengthening of the military, which is a shift in the Chinese military doctrines. Until quite recently in 2017, the focus of the military has been on protecting China’s interest along its maritime trade routes, but as China entered the league of major powers, defending its sovereignty and the development of its interests have played a major part in its national security discourse. The tensions across the Taiwan Strait,48 the complex debates around the South China Sea territories49 and the border dispute with India50 are all an indication and an effect of these policies, which is a big turn from protecting interests towards defending sovereignty. There has also been reference to the continuation of a stronger management of Hong Kong and Macau. This is apparent from the change in tone of the previous Five-Year Plans, since China now wants to “maintain” rather than “support” the long term prosperity of Hong Kong and Macau.51 Another important factor is that the “One country, Two systems” principle is still going to be used for conducting the two city’s administration, which is an obvious point to make, since the fifty years have not passed since Hong Kong has been handed back to China yet, so in theory, the way of conducting policies should be expected to remain in place until the 2047 deadline.

Kenderdine 2020.

China’s Fifth Plenum: Confidence in the Path. Brunswick Group. November 2020. <https://www. brunswickgroup.com/media/7814/brunswick-china-briefing-2020-11-fifth-plenum-in-review.pdf > Accessed: 25 January 2021. 47

Rik Glauert: Will Taiwan Strait tensions lead to conflict? Five things to know. Nikkei Asia. 25 September 2020. <https://asia.nikkei.com/Politics/International-relations/Will-Taiwan-Strait-tensions-lead-to-conflict-Five-thingsto-know > Accessed: 25 January 2021. 48

Mark J. Valencia: US and its allies must be wary of provoking South China Sea conflict over freedom of navigation. South China Morning Post. 1 January 2021. <https://www.scmp.com/comment/opinion/ article/3115813/us-and-its-allies-must-be-wary-provoking-south-china-sea-conflict > Accessed: 25 January 2021. 49

Norbert Miklós: China vs India: Don’t Hold Your Breath for WWIII. Antall József Knowledge Centre. September 2020. <https://ajtk.hu/en/research/research-blog/china-vs-india-dont-hold-your-breath-for-wwiii > Accessed: 25 January 2021. 50

51 China’s Fifth Plenum: Confidence in the Path. Brunswick Group. November 2020. <https://www. brunswickgroup.com/media/7814/brunswick-china-briefing-2020-11-fifth-plenum-in-review.pdf > Accessed: 25 January 2021.

Antall József Knowledge Centre of Political and Social Sciences

With regards to the Belt and Road Initiative, the communiqué highlighted that the 2019 BRI summit’s focus is still prevalent, as the high-quality development is the most important factor for development alongside the BRI. Since there has been harsh criticism on the loans and the sustainability practices of the initiative, even more focus is expected on the previously mentioned high-quality development, as the BRI is expected to continue with almost the same pace as before, according to the party’s leadership. In order for that to happen though, a greater focus for implementing modern risk mitigation measures is necessary with the due diligence frameworks for the projects, according to the communiqué.52 Looking ahead, we must also examine the role of Xi Jinping in the party’s leadership, which at a first glance seems virtually unmatched. His position at the core of the party has been further cemented, since the plenum reaffirmed his central role in state affairs. Besides the constant praise he has been receiving during the plenum, Xi was declared the main navigator with whom “at the helm”, China will be able to overcome all difficulties and obstacles.53 As this kind of use of terminology and the mentioning of him personally has been the first time, it seems that his power is truly unrivaled inside the party so his third term seems quite secure. From a certain perspective, it can even seem that Xi will hold onto his position until he is unable to govern or until he dies. The thoughts about the complicated international environment are another important point of the discussion. While the US is not specifically named in the document, it is almost certain that the main ideas revolve around it.54 Moving a step further, it seems like there is a paradigm shift occurring currently in Beijing about the international environment and with regards to the US-China bilateral relations. The rivalry and protectionism shows the cracks in the global value chain, which lead to a set of new problems. While still stating that China is in a “period of important strategic opportunity,” the leadership says that “there are new developments and changes in opportunities and challenges.”55 This of course happened because of the Trump presidency’s actions during the last four years, that are the unspecified cause of these new “challenges.” Nevertheless, the communiqué also references a “profound adjustment in the international balance of power”, since according to the leadership, the increase of the Chinese comprehensive national power seems constant, whilst the US’s international positions are only decreasing, and are going to continue to decrease in the future.56 When comparing the 14th Five-Year Plan to the 13th, a more profound techno-industrial policy focus can be seen. As innovation in science and technology remain equally as important,

52 China’s Fifth Plenum: Confidence in the Path. Brunswick Group. November 2020. <https://www. brunswickgroup.com/media/7814/brunswick-china-briefing-2020-11-fifth-plenum-in-review.pdf > Accessed: 25 January 2021. 53 China’s Fifth Plenum: Confidence in the Path. Brunswick Group. November 2020. <https://www. brunswickgroup.com/media/7814/brunswick-china-briefing-2020-11-fifth-plenum-in-review.pdf > Accessed: 25 January 2021.

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other critical policy areas are being downgraded or ignored, some experts think that this will lead to a regressive economic policy instead of a bold leap into the innovation-led future.57 The reasoning behind this thesis is the fact, that while manufacturing has risen to the second most important priority, now policies of advanced manufacturing can be expected, whilst rural development shifted from being the 4th most important area of the 13th FYP to only the 6th most important in the 14th. Along the lines of the previous argument, this lower priority of the rural reform can become the biggest dead-end if not carried out properly,58 especially when taking into account the grandiose projects planned and the still problematic institutional corruption. All in all, there is no sign of an apparent and significant change in the direction of previous policies, which can be summed up as “progress while maintaining stability”.59 What this means is firstly, as apparent from the beginning of the plenum, the 14th Five-Year Plan builds upon the successes of the 13th Five-Year plan, which enhances the previously mentioned and crucially important continuity. The not so new goals and objectives set a path for the future that is filled with realistic objectives, and sensibly maintaining the path, with innovation at its center. The further market-opening measures are likely to move forward as well, mainly in financial services and other non-manufacturing sectors. The mention of an uncertain geopolitical environment means, that on the international level, China is facing “new challenges.” The tensions with the US are certainly a factor for these hardships, which lead to the government calling for self-reliance in science and technology, as these are the most important strategic pillars for national development. These goals have already been set before the 5th Plenum that took place in October 2020, therefore it comes as no surprise that China wants to reinforce its positions on the international level, especially in the field of innovation. While the approval of the new 14th Five-Year Plan will only go through in March 2021, it is expected that only minor tweaks and certain specifications will be added. The exactification is an important tool of setting deadlines and precise goals, but since the many uncertainties that hit the party in the last year alone, alongside with the tendency of Communist regimes to give only a vague answer to certain questions on purpose, the main ideas for the new five-year period are unlikely to differ too much from the blueprint.

CONCLUSION Even though, the many aspects and certainties of the domestic plans put forth by the party is obviously a key for the further rise of China, the international environment also plays an important role in the rise of the nation. With the outgoing Trump, and the incoming Biden administration, the Chinese leaders must certainly have hoped for an improvement of relations, but as it seems so far, Biden might become even tougher on China than Trump

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did.60 This raises many questions for Xi Jinping and his clique, but as China seems to make it quite clear, it does not run away from a challenge.61 The further centralization of power, the more ambitious manifestations of the Chinese leadership’s will, and the hardliner policies both domestically and internationally create a China that is able to continue its rise until it reaches its objective of becoming a major power. Xi Jinping’s dream of positioning his country as a leader of innovation is already considered a provocative action for the US’s escalating import tariffs against China in the past, and the adoption of a more hardline foreign policy by Trump created even more tensions.62 The major power confrontation that culminated in a so-called “trade war,” ended up doing more harm than good for both sides. Nevertheless, according to the American rhetoric, the China-threat has become an indeed realistic fear, as a NATO report stated in December 2020 that China could indeed pose military threat to Europe and the US.63 But it is not just about the constantly improving military capacities of China, but the socalled “debt-trap” along the lines of the Belt and Road Initiative,64 and the purposeful trial of reshaping the existing economic routes alongside the national security risks of the Chinese 5G telecommunication networks that all give way to the new wave of treading carefully when it comes to China. As the Chinese leaders finalized the blueprint for the 14th Five-Year Plan, they were all aware of the American and Western perception of China. As the EU tries to navigate between the two rivals, it seems somewhat torn, at least on the level of economic policy and cohesion. Nevertheless, after Donald Trump steps down, and Joe Biden comes to power, the new president will offer a chance for stronger cooperation between the US and the EU in order to counter the growing influence of China.65 The commonly outspoken and sometimes harsh comments from Chinese officials, which led to the creation of the term “wolf-warrior diplomacy”―projecting the will and the power of a willful and powerful nation―, is not appealing for Western nations. The COVID-19 pandemic also hampered China’s global image, but as the country conducted its “mask diplomacy” by helping out its closest partners in Europe first, and then the rest of the world, China managed to raise

Thomas Colson: Biden will team up with Europe to be tougher on China than Trump. Business Insider. 6 December 2020. <https://www.businessinsider.com/analysis-biden-could-be-tougher-for-china-thantrump-2020-12 > Accessed: 25 January 2021. 60

Amanda Lee: China won’t back down in trade war with US: commerce minister. South China Morning Post. 10 October 2018. <https://www.scmp.com/economy/china-economy/article/2167715/china-wont-back-downtrade-war-us-commerce-minister > Accessed: 25 January 2021. 61

Erik Brattberg: Europe’s Emerging Approach to China’s Belt and Road Initiative. Carnegie Endowment For International Peace. 19 October 2018. <https://carnegieendowment.org/2018/10/19/europe-s-emergingapproach-to-china-s-belt-and-road-initiative-pub-77536 > Accessed: 25 January 2021. 62

63 Stuart Lau: Nato report says China could pose military threat to Europe and US. South China Morning Post. 2 December 2020. <https://www.scmp.com/news/china/diplomacy/article/3112179/nato-report-says-chinacould-pose-military-threat-europe-and > Accessed: 25 January 2021. 64 Anthony Rowley: The myth of China's 'debt trap' diplomacy. Nikkei Asia. 25 November 2020. <https://asia. nikkei.com/Opinion/The-myth-of-China-s-debt-trap-diplomacy > Accessed: 25 January 2021.

Judy Dempsey: Judy Asks: Is Europe Ready to Work With the United States on China?.Carnegie Europe. 10 December 2020. <https://carnegieeurope.eu/strategiceurope/83425 > Accessed: 25 January 2021. 65

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above the wave of blatant blaming because of the late response to the pandemic. Even so, there is still a lingering anti-China sentiment, which can certainly help America in the postTrump era to build its coalition of like-minded countries,66 just like China is trying to build its partnerships. In order for China to be successful with that though, it would need to make more concrete steps for deepening cooperation, and fulfilling its promises, for example on BRI projects, where the founding has started to slow down in the last couple of years.67 All in all, the envisioned steps in the 14th Five-Year Plan are surely going to help China getting a step closer to achieving its grandiose objectives. The fact that China has managed to be the only major country ending 2020 with a positive GDP growth speaks for itself.68 Based on these facts, some analysts expect a more radical China in the coming future, that is much more focused on self-reliance and political hardening.69 All this makes sense, since if the average Chinese citizen sees the potential in the developments and truly can reap the benefits from them, then they could give their full support for the government and its policies, as long as the people then expect more of the same: an improving lifestyle and country. This is exactly the reason for the ambitious social security, pension, and wage improvements, since such a regime is truly secure only if the people feel the benefits of keeping the leadership in power. As new strategic opportunities arise for China, and it keeps cultivating opportunities amid the crisis, it can manage its so-called “socialist modernization”.70 Of course, the adversaries and the new challenges are constantly lingering about, and are going to continue to vex the Chinese leadership, as it slowly starts getting back to normal after the pandemic. In the end, the future of China depends on Xi Jinping and his circle, who are determined to achieve China’s modernization, at almost any cost. The ambitions and plans are certainly a strong driving force, which paired with a large amount of resources will always make realizing dreams easier. Xi’s dream has entered into a new phase, one filled with momentum and positive domestic perspectives based on well thought-out reforms. The future of China, at least for the next five to fifteen years is in the hands of the Secretary General. Only time will tell if his dreams are destined for success or failure, but as of now, China’s prospects appear encouraging for the leadership in the coming years.

66 Abigail Ng: Beijing doesn’t want the U.S. to form an ‘anti-China coalition’ in the post-Trump era, consultancy says. cnbc.com. 26 November 2020. <https://www.cnbc.com/2020/11/27/us-china-beijing-wants-to-stop-ananti-china-coalition-in-asia.html > Accessed: 25 January 2021. 67 Cissy Zhou: China slimming down Belt and Road Initiative as new project value plunges in last 18 months, report shows. South China Morning Post. 10 October 2019. <https://www.scmp.com/economy/global-economy/ article/3032375/china-slimming-down-belt-and-road-initiative-new-project > Accessed: 25 January 2021. 68 Luca Ventura: Countries with Highest GDP Growth 2020. Global Finance Magazine. 18 June 2020. <https:// www.gfmag.com/global-data/economic-data/countries-highest-gdp-growth > Accessed: 25 January 2021.

70 Challenges, goals and proposals from China's ruling party plenum communique. CGTN. 30 October 2020. <https://news.cgtn.com/news/2020-10-29/19th-CPC-Central-Committee-concludes-fifth-plenary-sessionUZ8ZC4kHhm/index.html > Accessed: 25 January 2021.

Antall József Knowledge Centre of Political and Social Sciences