China’s five-year plans contain important strategic elements for the orientation of its economy. The current five-year plan, for example, featured the “Made in China 2025” strategy aimed at acquiring know-how in strategically important industries so that China would become a – if not the – leading industrial power by 2049.
While the full and final version of the new plan will not be released until March, the proposal put forward by the CCP’s Central Committee in November last year sets the stage for what to expect. It highlights, for example, the new development stage of “dual circulation.” Domestic economic activities (“internal circulation”) are to play a key role here and the starting point for all international economic activities (“international circulation”).
Thus, China will most likely focus much more on its domestic economy and strongly exploit its comparative advantage – a vast internal market. The proposal also highlights several green policies, which are expected to play an essential role in the new plan, charting the way to carbon neutrality in 2060. A strong focus remains on technological progress and indigenous innovation, so to further reduce independence on foreign technology.
Growing tensions between the US and China have painfully shown that this is a vulnerable point with the potential to hamper China’s development. It should be clear by now that the next global superpower is prepared to go to great lengths to overcome this weakness. Chinese leadership certainly regards this as an important prerequisite to achieving the long-term objective of reaching the middle level of high-income countries for GDP per capita by 2035.
The country is often portrayed as a master of long-term thinking.
The oft-repeated compliment paid to China’s leaders is that they “play the long game.” Masters of strategic thinking, the narrative goes, Beijing’s top cadres are always looking far ahead—planning, preparing, and plotting for the future. If only American politicians and businessmen could see past the next election cycle or quarterly earnings report, the Chinese wouldn’t be eating our lunch.
But then there’s the curious case of China’s impending demographic disaster: The country is getting old, and quickly, which is threatening its economic progress. The problem is nothing new. Experts have been ringing the alarm for years.
You’d expect Beijing’s officious planners to tackle this challenge the same way that they build high-speed railways or squash COVID-19 outbreaks—with the full zeal and heft of the state. Not this time. Like a deer caught in the headlights, the Communist Party has seemed paralyzed, unable to mount a response even as the aging express train runs it over.
Its latest attempt to address the issue, announced in May, was to lift the ceiling on the number of children each couple is permitted to have, from two to three. The measure was met with a collective yawn from analysts, who predict it will have little effect.
The Chinese government’s botched population policy is more than just an outlier, or a nuancing of a broader narrative: It tells us about how the Communist Party governs and exposes weaknesses that not only counter its reputation for strategic genius but also imperil China’s climb to global greatness. Like any political organization, China’s Communists can be consumed by short-term priorities or trapped in bureaucratic entanglements, leading to decisions that sacrifice long-term benefits to immediate interests.