Business SinoBeat

China to set a new five-year plan for troubled economy

China’s Communist rulers will gather later this month, state media said Monday, to set a course for the world’s second-largest economy over the next five years, as slowing growth raises global concerns.

The Communist Party meeting, known as the Fifth Plenum, is expected to focus on structural reform and easing state control — although such moves have been repeatedly promised before.

18th_National_Congress_of_the_Communist_Party_of_China

Photo: Wikicommons.

The world’s most populous country has enjoyed a decades-long boom since the ruling party embraced market economics and opened up to the rest of the world from the late 1970s.

The process has transformed the livelihoods of hundreds of millions of people and propelled the country to global prominence.

But growth has been slowing for several years, and analysts say the party needs to embrace further liberalisation to avoid falling into the stagnation of the “middle income trap”, when developing countries fail to fulfil their full potential.

The Communist Party continues to issue regular economic guidance, including Five Year Plans and annual targets for the country’s growth.

The Fifth Plenum will be held from October 26 to 29, the official Xinhua news agency reported Monday, citing a statement from the Central Committee.

It will finalise the 13th Five Year Plan, which will start next year.

Under President Xi Jinping, who took power in 2012, the Communist Party has pledged to give markets a decisive role in the economy.

But large-scale interventions into the country’s falling stock market this summer have called into question the government’s willingness and ability to follow through.

Beijing has poured hundreds of billions of dollars into the market and cut interest rates, among other measures, following a rout that saw the Shanghai Composite Index plunge from a high of over 5,000 in mid-June to a low of just under 3,000 in August.

stock market

Photo: Reuters.

The ruling party has committed to making China a “moderately prosperous society” by 2020, when the plan will complete, a goal that includes doubling per capita income for urban and rural residents from 2010 levels.

Continually rising prosperity is a key element of the Communist Party’s claim to legitimacy, but the target has seemed less and less achievable as China’s economy has slowed in recent years, weighed down by overcapacity and falling exports.

Leaders have regularly promised a “new normal” of slower but more sustainable growth, led by domestic consumer demand, but the transition is proving bumpy and global markets have been spooked by recent economic figures.

At the meeting in October, leaders are expected to discuss reform of state-owned enterprises that continue to drag on expansion, and their conclusions will be formally approved by the rubber stamp legislature next year.

Plenums are key meetings of China’s Communist leaders on specific issues, such as one last year on the rule of law, which issued guidelines intended to centralise the party’s power.

China to set a new five-year plan for troubled economy