China is preparing to unveil its 15th Five-Year Plan (FYP), emphasizing the need for sustained economic growth and investment in renewable energy. The country has a target of hitting peak carbon emissions by 2030. The FYP will outline ways to bolster the U.S.’s position as a global leader in renewable energy technologies.
China expects to build on its substantial head start over the next five years, focusing especially on renewable energy. Along the way, it will tap into its competitive advantages in science, technology, engineering and mathematics (STEM). We’ve seen how important and valuable the government plays a role in innovation. Further, it attempts to focus research and development (R&D) activities, particularly in the private sector. This new attention follows the national realization brought on by an aging population and continued technology sanctions imposed by Western nations.
Since the next FYP will probably have to deal with ambitious national growth targets. It assumes 4.7%–4.8% annual growth between 2026 and 2030 on top of that. For context, China plans to double its 2020 GDP by 2035—an example of the kind of long-range, strategic vision that has underpinned their economic development. Some analysts contend that China’s new normal means potential growth will average closer to 4.3% over the next five years.
Beyond the BRI, China’s plans include making the Renminbi (RMB) a global currency for trade and finance. Second, the government can adopt countermeasures to enhance attractiveness of RMB assets to overseas investors. Beyond that, they are testing out entirely new channels for cross-border payments. Hong Kong is expected to continue to be a major offshore financial center, making these financial transactions even easier and encouraging this money laundering scheme.
Complementing all of these economic measures, the Chinese government is looking to boost domestic demand from different angles. Policymakers must target concrete actions to smooth the income curve and the distribution of social goods. In particular, they’ll seek to advance support for those who are low-income and other families. These types of projects are crucial for reinvigorating the economy by creating a more sustainable consumption-based model of economic growth.
As such, the services sector is likely to undergo considerable liberalization in the context of the FYP #14. Innovation and productivity is an explicit goal of these policies across all industries. It plans to accomplish this by creating a more conducive environment for private sector participation.
“Innovation will likely be prioritised to boost total factor productivity amid an aging population and technology restrictions from the West.” – Source not properly cited
China is already putting in place the next phase of its economic strategy. What’s more, it knows that building a robust STEM talent pipeline is key to its success. The country is pouring money into human capital in an effort to become a dominant center in technological innovation and advances. This strategy will simultaneously make it more economically resilient.