China’s powerful Communist Party has delivered the government’s next five-year plan aimed at delivering improved prosperity for the country.
Against a backdrop of slowing growth and the need for change of social policies, unsurprisingly, leaders are looking for economic stability for the nation’s 1.3 billion people.
Helen Zhu, financial firm BlackRock’s head of china equities has looked at the plan in detail and highlighted some of the more important targets.
“The plan aligns with market expectations with an accent on sustainable growth,” she said.
Economist and Premier Li Keqiang is credited for providing the blueprint for the plan.
New normal for China GDP
He believes China needs an average annual GDP growth of 6.53% to carry the plan through to achieve the party’s targets.
This is significantly less than some of the double-digit figures returned in recent years, but in line with forecasts for 2016.
“Growth is important, but China is looking for a new normal rather than powering ahead economically,” said Zhu. “The economy has not run out of steam, but the foot has been taken off the accelerator to maintain a more steady speed.”
One big surprise was the announcement that a ban on couples having more than one child is lifted to a new two child a family limit.
The thinking is believed to be that the government has seen 35 years of rigorously enforcing the ban has left China with an aging population and a lack of younger, educated workers to see through stable growth.
Although the major social change will take years to make any great impact on the work force, this major genetic control is seen as a change for the better.
The other main socio-economic target is to double income per head from 2010 levels by 2020.
“Both these policies will help maintain growth, as parents will have another child to feed, clothe and nurture, while giving people more money to spend should broaden the economy by creating more demand for goods and services,” said Zhu.
Couple this with internet and technology policies designed to increase e-commerce, share data, develop biotechnology and provide cleaner energy and the intention to move away from manufacturing to a more service-based economy seems to be driving the plan.
This is China’s 13th five year plan – the first was introduced by Chairman Mao in the 1950s.