The Fifth Plenary Session of the CPC Central Committee Draws a Grand Plan to Lead the Development Direction

The Fifth Plenary Session of the CPC Central Committee Draws a Grand Plan to Lead the Development Direction

Yao Yang,

President of National Development Research Institute of Peking University

The 5th Plenary Session of the 19th Central Committee of the Communist Party of China is Closed on October 29,2020, in Beijing

The 5th Plenary Session of the 19th Central Committee of the Communist Party of China is closed on October 29, 2020，putting forward comprehensive guidelines for the 14th Five Year Plan (2021-25), charting the future grand course, setting the direction and guiding the economic and social development.

The 5th Plenary Session proposed to speed up the construction of a new development pattern with domestic circulation as the mainstay and domestic and international circulation reinforcing each other. For decades, China's economy has been integrated with the world economy. However, the changing international environment has prompted China to shift its focus to the domestic economy. Yet, more emphasis on the domestic economy does not mean that China will withdraw from the global economy. As stated by the Communique of the 5th Plenary Session, China will further open up to the outside world.

Since April this year, China's share in global trade has increased, which proves that the so-called experts' prediction of global economic de-Sinozation is wrong. However, on the grounds of national security, the United States has increased its efforts to "decouple" from China in the field of technology. As Chinese generally understand, the real intention of the United States is to contain or even arrest China's technological progress. In fact, contrary to the decoupling arguments, the scale of foreign direct investment flowing into China has grown somewhat against the unfavorable trend this year.

The U.S. practice targeted at Chinese enterprises has had some negative effects. Huawei, the Chinese telecoms giant, has lost most of its supply of high-precision chips and may have to stop producing high-end smart phones if the U.S. ban continues until 2021. Chinese universities and other Chinese enterprises included in the "entity list" by the United States are also affected.

Under this change, scientific and technological R&D in key areas has become a priority task for China. One area is the chip industry. The United States controls the technology of high-precision chips, while China has the ability to increase its production of low-precision chips. In fact, most of the industrial demand is for low precision chips - chips of 40 nm or more account for nearly 80% of the total chip demand.

In the past few years, China has increased investment in the chip industry. The U.S. ban will accelerate the process. In addition to government support, China has another advantage, i.e., China is a big country with a huge market. Once China's chips production increases, their costs will soon come down.

With the experience of manufacturing low-precision chips, China will be able to manufacture high-precision chips sooner or later. So American chips manufactures will lose a huge market, which will greatly hinder their innovative ability. The United States seems to adopt a "Tonia Harding strategy" against China, running a risk of suicide to destroy its competitors.

China's strategy of achieving self-reliance and self-improvement in science and technology will be supported by other strategies proposed by the 5th Plenary Session to boost the domestic economy. For example, a new wave of urbanization will greatly promote domestic consumption and investment, which are related to cutting-edge technologies such as 5g technology.

Although about 62% of China's population now lives in urban areas, when China’s per capita GDP reaches the current level of Japan and South Korea, with 72% of their citizens as urban residents, therefore in the coming 15 years, it is possible that 75% to 80% of Chinese people will live in urban areas

In addition, in the next few years, the distribution of public goods among different income groups and regions will be more equitable. At present, China's pension insurance and medical insurance systems are out of touch, there is a large gap among regions, and between urban and rural areas. We should further promote the construction of a unified system of pension endowment insurance and medical insurance, and promote the trans-provincial and trans-regional flow of labor force.

China will also shoulder more international responsibilities. China will enhance its national independent contributions, adopt more effective policies and measures, strive to reach the peak of carbon dioxide emissions by 2030, and to achieve carbon neutrality by 2060.

The only way for China to achieve these two goals is to improve energy efficiency and increase the proportion of renewable energy in the energy structure. The Chinese government has taken measures in this direction, launching plans for carbon trading and green finance. With the great transformation of industrial structure to green production, China's scientific and technological progress will also reach a new level.

(Edited excerpts of the article in China Daily, 30 October 2020)