China’s Ambitions in the 12th Five-Year Plan

Source: the Atlantic

As the annual sessions of the National People’s Congress and the National Committee of the Chinese People’s Political Consultative Conference closed this week, it is time to look over the highly anticipated draft of the 12th Five-Year Plan. Xinhua News Agency did a good job on summarizing the key words of the 12th Five-Year Plan. Let’s take a closer look at China’s ambitions:

Economic targets

GDP to grow by 7 percent annually on average;

— More than 45 million jobs to be created in urban areas;

— Urban registered unemployment to be kept no higher than 5 percent;

Prices to be kept generally stable.

Economic restructuring

— Rise in domestic consumption;

— Breakthrough in emerging strategic industries;

Service sector value-added output to account for 47 percent of GDP, up 4 percentage points;

— Urbanization rate to reach 51.5 percent, up 4 percentage points.


— Expenditure on research and development to account for 2.2 percent GDP;

— Every 10,000 people to have 3.3 patents.

Environment & clean energy

— Non-fossil fuel to account for 11.4 percent of primary energy consumption;

— Water consumption per unit of value-added industrial output to be cut by 30 percent;

— Energy consumption per unit of GDP to be cut by 16 percent;

Carbon dioxide emission per unit of GDP to be cut by 17 percent;

Forest coverage rate to rise to 21.66 percent and forest stock to increase by 600 million cubic meters;


— Annual grain production capacity to be no less than 540 million tones;

— Farmland reserves to be no less than 1.818 billion mu.


— Population to be no larger than 1.39 billion;

— Life span per person to increase by one year;

Pension schemes to cover all rural residents and 357 million urban residents;

— Construction and Renovation of 36 million apartments for low-income families;

— Minimum wage standard to increase by no less than 13 percent on average each year;

Social management

— Improved public service for both urban and rural residents;

— Improved democracy and legal system;

— Better social management system for greater social harmony;

More than 10 percent of all residents will be registered as community volunteers.


— Encourage qualified enterprises to get listed in stock markets;

— In-depth reform in monopoly industries for easier market entry and more competition;

— Improved government efficiency and credibility

After being the world’s second largest economic entity, Chinese government finally realizes that the export-driven, GDP-oriented economic development should be replaced by a more sustainable developing way, because there are so many problems being brought up: the high inflation, the real estate bubble, the environment  pollution and energy waste, the underdeveloped social security and so on.

One another thing is also worth to emphasize: the community volunteer is a total new concept for most of the Chinese. China haven’t had a community culture as Western society. Back into the “Red Revolution” period, people are belonging to “Danwei“, which means a work unit. According to Wiki, “a work unit acted as the first step of a multi-tiered hierarchy linking each individual with the central Communist Party infrastructure.” Now building a community culture to replace the Danwei culture indicates that the hierarchy linkage between citizens and the CCP is officially weakened, which I think is a good signal for Chinese society.

It is also interesting to know how Western looks at the 12th Five-Year Plan. Here are two totally opposite opinions: one is criticizing that Chinese government just have a “big talk”- alway has some glorious goals, but never releases any details about how to achieve these goals in its plan; another is hoping the United State could learn from China to have some clear directions in a certain period.

Which one you agree more?

Call for Economy Transformation

Now that China has been buffeted by global financial crisis for more than a year, it is time for China to start economy transformation, urged the Editorial Board of the People’s Daily, the official newspaper of the Communist Party of China in an editorial.

The article argued that China is depended too much on international trade, which leads to economy prosperous, but also makes the whole system fragile. China should improve the production capabilities and technical skills of its own industries, rather than taking advantage of the cheap labor market.

I like this article because it gets the point of China’s weakness. China has been focusing too much on the GDP growing, and it really does a good job on it. But if China still relies on the cheap labor to produce the raw materials, without developing its own high-technology and high-end manufacturing industries, its economy cannot be considered as healthy.

The raw products like billet, rolled steel, refined oil and plastic are closely depended on the global climate. If the global market is manipulated by the industry giants or international speculators, China could do nothing but bear it.

An article called “Problems of China’s steel industry” tells what happened to China’s steel industry last year:

In 2009, industrial capacity exceeded 700 million tons while the domestic market could only consume about 560 million. The excess capacity is estimated at over 100 million tons. The situation may worsen this year as analysts predict demand will continue to lag behind supply.

China’s steel overcapacity is also a bad news for the environment. An article published on Chinastakes described its environmental problem:

China has overtaken the US as the largest emitter of greenhouse gases (GHG), to which steel industry contributes no small part.

Just before the Copenhagen climate conference, China promised to lower emissions per unit of GDP by 40 to 45 percent by 2020. As many countries, developed and developing, pointed out, this is the promise of merely a slowdown and not a cut of emissions, and pressure on China to get serious is increasing. The US Congress is even now considering levying penalties against imported products from high emission processes, and also including in climate change legislation additional tariffs on imported steel and other energy-intensive products to offset alleged competitive harm to domestic industries, should other countries not commit to equivalent GHG reductions. China is the key target, and he steel issue threatens to pass currency valuation as the most contentious trade issue between it and the United States.

It is an urgent need for China to transform from low-technology and polluting manufacturing to high-technology and eco-friendly industries. Being the fastest economy growing country is good, but China should also realize that GDP is not everything.

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