The Proposals for the 13th Five-Year Plan for National Development adopted by the Fifth Plenum of the 18th Central Committee of the Communist Party of China specified that China will complete the building of a moderately prosperous society in all respects by 2020. The fulfilling of this goal called for the doubling of total economic output and per capita income between 2010 and 2020, which was a difficult job. Calculated from the perspective of static growth, the accomplishment of this task demanded the annual GDP growth rate remained at over 6.5% during the 13th five-year plan period. In addition, besides the demand on economic growth, we are also facing many daunting tasks to finish in this very period, for instance, the thorough elimination of poverty in China (the poverty-stricken population of China is now 70 million), the realization of the vision of building a beautiful China and interchange green development with comprehensive ecological improvement. What’s more formidable was that with the demographic dividend of China waning to a close, if we want to stride over the middle-income trap, we have to comprehensively improve the quality of labors and unceasingly improve the total factor productivity. The accomplishment of the above daunting tasks of the 13th Five-Year Plan depends on both the open concept of development and the resume of new momentum driving the economic boom of China. In this article, the author will share his own views on these two issues.

Ⅰ. Winning the Initiative of Development with the Open Concept

The Fifth Plenum of the 18th Central Committee of the Communist Party made a scientific evaluation on the domestic and international development environment of China and concluded that the economic development of China is still in an important period of strategic opportunities. This was an important judgment made by the CPC Central Committee in light of developments and changes in the domestic and international situations. It will help us make scientific evaluation on the macro-situation, grasp development opportunities, and strengthen our confidence on development. We should not only be convinced of our development potential, but also strengthen our resolve to overcome difficulties.

 

The CPC Central Committee emphasized that we should promote the development of our socialist building through opening up wider to the world during the 13th five-year plan period. This was not only a principle requirement on the work of all aspects, but also a concrete demand on expanding opening to the outside world during this period. There is much content relating to opening to the outside world in the 13th five-year plan period which we should make good comprehension and firm implementation, including championing mutually beneficial opening-up policy, promoting opening up at a higher level, developing a higher level of open economy, speeding up replenishing the strategic layout of opening up to the outside world and forming a new system of opening up. The CPC Central Committee also put forward clearly that the management model of pre-establishment national treatment (PENT) with a negative list will be introduced and fully implemented-this was a timetable of deepening the reform of opening up to the outside world which should be implemented resolutely in practice.

 

All in all, the 13th five-year plan drew up a series of work and reforms on building a new system of open economy. We know for certain that in the next five years, the challenges we are facing in both domestic and international development environment will increase further. On the international stage, we are not only facing the pressure of further opening our domestic market, but also confronting with the challenge of the reconstruction of high-standard international economic and trade rules. At home, there are not only the difficulties of economic restructuring, transformation and upgrading, but also the challenges of structural unemployment and crossing the “middle income trap”. As the period of the 13th five-year plan was the decisive stage of completing the building of a moderately prosperous society in all respects and a series of reform and opening up tasks need to be finished, our schedule in this period was tight and our tasks are arduous. There was no turning back or alternative. We should implement resolutely the five development principles (namely innovation, coordination, green, open and sharing) proposed by the Central Committee of CPC, develop our socialist building by opening to the outside world, and win the initiatives of economic development, international competition and the development in the decisive phase with an opening mind and system.

Ⅱ. Command Scientifically the New Momentum Driving Chinese Economic Growth

First, new type of urbanization will trigger new demands. The urbanization of China achieved great accomplishments during the high growth period, and the problems of traffic barriers and large scale construction of residential housing were preliminarily resolved, especially the development of high-speed rails and expressways completely changed the geographical pattern of China, smoothed the flowing of people and goods, and greatly improved social effectiveness. However, the public service facilities inside cities and the quality of community service still need to be improved, especially the cultural and sports facilities in urban areas. In the future development of urbanization, we should on the one hand advance the process of meticulous development of metropolises, including promoting the construction of urban drainage pipeline system and reconstruction of shanty towns, improving the supporting facilities such as strengthening the internal construction of communities and the supporting system for life service; on the other hand extending the scope of functions of small and medium cities, such as enhancing the development of commercial centers and cultural centers and enriching their contents. The development of urbanization will on the one hand form new investment engines, on the other hand improve the consumption capacity of residents. With the transformation of government functions, the government will further strengthen the investment in public facilities and service, which will stimulate large quantity of new investments and demands, thus supporting rapid economic growth.

 

Second, the coordinated development of regional economy will form new driving effect. Currently, besides the cluster of cities in the Pearl River Delta and urban agglomeration in the middle and lower reaches of the Yangtze River, the Yangtze River Economic Zone and the integrated development zone of Beijing, Tianjin and Hebei also began to take shape. During the 13th five-year plan period, the extent and pace of coordinated development of regional economy will further upgrade. According to incomplete statistics, the number of major regional economic development plans which has been approved by the State Council has reached about 20. These plans will form different growth poles and the future development of China will walk out of the assimilation of cities and pursue differentiated development of cities by exploring new positioning of urban functions. The complementary development of cities and the improvement of service and efficiency will eventually benefit consumers. Whether with the nature of public welfare or social service, these development programs will boost investment and stimulate consumption. The scale of some government leading public welfare investment will further expand, and the inter-city traffic and the environment of logistics will get further improved.

 

Third, intelligent manufacturing and smart household consumption will enter into a new development phase. The 13th five-year plan period is the crucial stage of industrial transformation and upgrading, and intelligent manufacturing has been enrolled into the sub-plans of the 13th five-year plan. The automation level of robot manufacturing and production will continuously upgrade. With the development of internet technologies, the integration of three networks (namely telecommunications networks, radio and television networks and the Internet) will achieve breakthrough and the intelligent alteration and upgrade of household facilities will bring a new round of consumption tide. Under the background of the gradually dissemination of big data and cloud computing, with the integration of television, personal computer with home appliances, the application and popularization of technologies of video and radio-frequency, the development of mobile service, and the application and popularization of 5G technology, family life and household consumption will undergo revolutionary changes, and its promotion and stimulation on residents’ consumption will surpass the role ever played by mobile internet and cell phones. The consumption intensity of people will be improved to a new level, with the service in terms of culture, sports, baby care, pension industry and tourism witnessing comprehensive improvement and life service like catering and entertaining more convenient. Automation and internet technologies applied in these sectors will completely change people’s life and at the same time create new consumption demands in new domains. With the upgrading of consumption, manufacturing industry will face the challenge of the continuous development of new products, and one of the daunting tasks of the manufacturing sector will be how to meet people’s growing demand for new consumption. We will eventually recognize that instead of consumption, it is the demurrage of supply that influenced the development of economy.

 

Fourth, opening-up at a higher level will smooth the flowing of domestic and international resources. During the 13th five-year plan period, we will confront with double challenges, namely opening the markets and adapting to new trade rules. In terms of market opening, besides implementing the policies raised by the Third Plenary Session of the 18th Central Committee of the CPC of opening the markets of baby care, industry for retired elder support, architectural design, accounting audit, commercial logistics, electronic commerce, we should also accelerate the opening of markets of finance, insurance and securities in accordance with the requirements of the Fifth Plenary Session of the 18th Central Committee of the CPC. The key to opening to the outside world was to accelerate the implementation of management model of pre-establishment national treatment with a negative list. We must make breakthroughs in the reform of the above aspects in the first two years of the 13th five-year plan period. With the launching of China-ROK and China-Australia FTAs, the negotiation on RECP and China-ROK-Japan FTA is expected to make great progress in the next year, and at that time China will witness a new pattern of opening to the outside world at a higher level. At home, such a new pattern will stimulate the enthusiasm of development of various types of enterprises, enhance the further development of domestic investment and trade, boost the introducing of foreign investors and international direct investment in China, thus promote economic development. At the international level, with the improving of extent of market opening, more and more countries will open their domestic markets to China on the basis of the principle of reciprocity, which will promote the overseas investment and trade carried out by Chinese enterprises, thus aiding the growth of competitive transnational corporations originated from China. Meanwhile, opening to the outside world will exert positive influence on the management model of China, smooth the flowing of various resources, enhance the upgrading of all production factors and the all-round integration of Chinese economy with global economic system, thus enabling China to gradually play a leading role in the international community. Multinational corporations originated from China can not only prosper themselves in the process of competition, and win honor and pride for China, but also transfer the profits generated by their overseas branches to China so as to improve the national income of China and contribute to Chinese GNP, which will not only improve the economic aggregate and competitiveness of China, but also surge the influence of China on the international stage. This is absolutely a necessary step for the growing up of Chinese economy.

 

Fifth, the sparkling of new momentum driving the economic growth of China calls for the support of certain external environment. Chinese economy is currently in a phase in which the old engines of economic growth are in accelerated decline and the new engines of economy are still in the process of development. The key point, at the moment, should be motivating all resources to support the accelerated development of new engines driving economic growth. It is expected that these new engines will constitute the main content of our country’s economic growth and play a major role in supporting economic growth. However, it should be admitted that the sparkling of new momentum driving the economic growth of China calls for a better external environment-the core of such environment being a fair and ruled-by-law business environment and an opening policy which facilitates the smooth flowing resources. It is a daunting task for the government departments, especially the economic agencies and it is crucial to fulfill the following points: the first is to carry out economic work with new ideas of economic development. The development concepts of innovation, coordination, green, open and sharing raised by the Fifth Plenary Session of the 18th Central Committee of the CPC are being assimilated and implemented by people. As long as all walks and all sectors carry out these scientific development ideas, the economic development of China will create new miracles and the quality and effectiveness of economic development will improve substantially. The second is to continue to adhere to transformation of government functions, reduce administrative examination and approval, and better play the role of the government. The key of transformation of government functions was to improve the quality of public goods and service, improve the capability and quality of social governance, strive to establish a fair competitive market environment, accelerate the formation of a unified, competitive and orderly market system. These measures will accelerate the further development of mass entrepreneurship and innovation, further stimulate the development momentum of all forms of ownership, thus eventually forming the gratifying situation of state-owned enterprises, foreign investment, private enterprises competing with each other and prospering together.

 

(Huo Jianguo, Researcher of Chinese Academy of International Trade and Economic Cooperation, MOFCOM, Member of the Standing Committee of CAFIU’s Executive Council.)