Today's Letter IEDI provides a summary of the main aspects of China's 14th Five-Year Plan (2021–2025) and the Long-Term Goals, approved by the National People's Congress on March 12, 2021. Formulated and implemented since 1953, the five-year plans are the centerpiece of the national system of planning and industrial policy in China.

Prepared in accordance with the recommendations approved at the fifth plenary session of the 19th Central Committee of the Communist Party of China, in October 2020, the 14th Five-Year Plan marks the beginning of a new journey to modernize the country, according to Chinese authorities. The Plan is based on three new dimensions: 

  •  New Development Stage: due to the ongoing changes in China's internal and external environment, the high-speed development model is in transition to a high-quality development model;

  • New development philosophy: the new development philosophy is characterized by innovation, coordination, environmental protection, openness and sharing;

  • New development strategy: the new strategy for the development of dual circulation is based on domestic circulation, with international and internal circulation reinforcing each other.

The 14th Five-Year Plan sets specific targets to be achieved by 2025 for the main economic and social development indicators, announces reforms and outlines China's domestic and foreign policy priorities, while providing a signal to local governments and businesses on the types of investment projects that will be supported in the future.

Of the targets established by the 14th Plan for economic and social development indicators, only eight are mandatory. This is the case, for example, of the goal of increasing the working-age population's average years of schooling, as well as the goals set for the environment and for the area of food and energy security. 

Unlike previous five-year plans, for the first time a numerical growth target for gross domestic product (GDP) for the next five years has not been established. The 14th Plan suggests a new system of “indicative economic growth targets,” which will be defined annually based on real conditions. For the year 2021, a GDP growth target of over 6% was set.

Among the main priorities of the 14th Plan, the following stand out:

  • Transform China into a self-sufficient technological and industrial power; 

  • Promote the digitalization of the economy and society;

  • Emphasize domestic demand in the dual circulation strategy;

  • Accelerate green development towards a low carbon economy;

  • Elevate China to the position of leadership in regional and global economic governance.

In pursuit of technological self-sufficiency and independence, the 14th Five-Year Plan aims to improve Chinese skills in seven “technological frontier” fields and reduce the country's dependence on foreign components and supply chains in these areas. The seven technological domains are: Artificial Intelligence, Quantum Technology, Integrated Circuits, Neurosciences and Neural Networks, Health Sciences, and Deep Maritime, Polar and Space Exploration. By 2025, these and other emerging industries are expected to represent 17% of China's GDP.

The government is betting on foreign collaboration in basic research, open technology and overseas Chinese research centers to boost innovation capacity and accelerate China's transformation into a scientific and technological powerhouse. The 14th Plan specifically encourages central and local authorities to facilitate private investment, international cooperation and adopt less restrictive visa regulations for foreign talent.

To accelerate the Fourth Industrial Revolution and strengthen China's role as an industrial superpower, the 14th Plan promotes innovation and connectivity within the manufacturing industry, prioritizing projects in eight medium-high and high-tech industrial areas, among which new materials, advanced manufacturing, robotics, smart and new-energy vehicles, state-of-the-art medical devices and innovative medicines.

During the period of the 14th Plan—with 5G technology, Industrial Internet of Things, big data analytics and other new infrastructures—the Chinese manufacturing industry is expected to start a new era of transformation, strengthening competitive advantages in comprehensive networks of the supply chain and industrial clusters.

To promote the digitalization of the Chinese economy and society, raising the digital economy's share to 10% of GDP by 2025, the Plan signals seven priority sectors for investment: cloud computing, Internet of Things (IoT), Industrial Internet (IIoT), big data, blockchain, artificial intelligence, virtual and augmented reality. 

The 14th Five-Year Plan makes several mentions to the dual circulation strategy presented by President Xi Jinping in 2020, in which the main driver of the economy should be domestic supply and demand, as well as innovation, keeping foreign markets and investors as a second engine of growth. 

The internationalization of the Chinese economy is no longer a goal in itself, but a support for domestic modernization and development.

In line with this strategy, the 14th Plan emphasizes the increase in domestic circulation, strengthening supply chains, domestic consumption and the Chinese middle class. The further reorientation of the economy towards its vast home market should reinforce the country's economic self-sufficiency, which faces an increasingly challenging external environment. 

However, deepening China's integration with the global economy remains a priority. Thus, with regard to external circulation, the Plan reiterates China's commitment to remove non-tariff barriers to trade and repeats the statements of previous five-year plans on opening up the services sector and eliminating restrictions on investors' access. 

With regard to green development, the main priorities of the 14th Plan are improving China's energy efficiency, expanding renewable energy sources, researching advanced energy storage technologies and developing the State's smart energy grid.

Reflecting the government's continuing effort to expand its leadership role across Asia and the world, the 14th Plan indicates that China will continue to “deepen multilateral, bilateral and regional economic cooperation” over the next five years.

The full text is available in Portuguese.