CHINAMacroReporter

'The five-year plan's big target - A confident China seeks to insulate itself from the world'

National People's Congress: China's Paths to Power & Self-Sufficiency

The National People’s Congress concluded on Friday, March 11. As I’ve mentioned before, analyses of the impact of the plans and policies on China and the world will start to come out in a week or two. In the meantime and to keep you immediately informed, today’s issue covers the NPC’s outcomes more generally, beginning with a full summary from The Economist.
by

|

The Economist

March 13, 2021
'The five-year plan's big target - A confident China seeks to insulate itself from the world'
BIG IDEA | ‘State media hail five-year plans as evidence that China has far-sighted leaders, who bravely chart new paths for the future. But the documents really summarise where the country is already heading. The pursuit of self-sufficiency is well under way, however costly it may prove.’

‘The annual session of China’s legislature, the National People’s Congress, concluded on March 11.’

‘The main business of the congress was ratification of a new five-year plan that aims to make China even more powerful, while guarding it against global rivals.’

  • ‘The new plan—the 14th, running from 2021 to 2025—confirms just how serious the leadership is about trying to insulate the country from the hostile foreign forces that it believes are arrayed against it.’

‘The document does not mention America by name, but it does not need toevery official knows that competition with America looms large in China’s strategies.’

  • ‘The previous five-year plan described how a peaceful multilateral world would benefit China. This one highlights the danger of “hegemonism”.’

Geopolitical uncertainties help explain what, to many observers, is its most striking element. That is its omission of one target that was a centrepiece of previous plans: average yearly growth.’

  • ‘Instead, it states that growth targets will be set each year, depending on conditions.’
  • ‘China is wary of committing itself when it does not know whether America will choke off its supply of high-end semiconductors, among other things.’
  • ‘But the plan does pledge that China will be a “mid-tier developed country” by 2035.’

‘More telling in this plan is the kind of growth it describes.’

  • ‘It talks of a “dual-circulation strategy”, a mouthful of a concept unveiled by Mr Xi last year.’
  • ‘This requires China to remain part of the “international circulation” of global trade—the plan says it must defend its share of export markets.’
  • ‘But it emphasises the improvement of “domestic circulation”—ie, the building of a vibrant economy at home while reducing dependence on others.’

‘Other aspects may worry the rest of the world.’

  • ‘The plan does not mention the “Made in China 2025” programme that has been roundly criticised by American officials as an industrial policy on steroids. But the main elements of it remain.’
  • ‘In setting out priorities for manufacturing, the plan urges investment in the very same sectors, from robotics to electric vehicles.’

‘It also identifies seven frontier technologies that are deemed vital to development and national security.’

  • ‘These include quantum computing, semiconductors and artificial intelligence.
  • ‘China is already spending vast sums on these technologies, but results have been patchy. Its years-long drive to catch up with world leaders in the making of semiconductors has so far fallen well short of the government’s ambitions.’

‘China wants to prop up less cutting-edge production, too. The country is the world’s biggest maker of goods. Its share of global manufacturing is nearly 30%—about the same as the combined shares of America, Japan and Germany.’

  • ‘Many foreign firms wonder whether to move some operations away from China, because of climbing costs and political risks arising from tensions with America.
  • ‘The plan calls for China to keep critical parts of supply chains in the country.
  • To foreign executives, that may sound threatening.’

‘More positively, one way that China hopes to maintain its industrial advantage is with its tried-and-tested approach of building top-notch infrastructure.’

  • ‘The transport ministry has plans to nearly double the length of China’s high-speed rail network to 70,000km within 15 years.’
  • ‘That would make it almost five times as long as all other high-speed rail networks in the world combined.’

‘The five-year plan hints there may be economic difficulties ahead.’

  • ‘It commits to stabilising or reducing the ratio of China’s debt to GDP—implying that it is getting too high (nearly 300% of GDP).’
  • ‘But cutting debt will be tricky when pouring cash into infrastructure and sponsoring high-tech.’

‘The environment is another thorny issue. China has vowed that its carbon emissions will peak by 2030, and the country will be carbon neutral by 2060.’

  • ‘The plan, however, gives little indication of how to get there, except for boosting nuclear-power generation from 52 gigawatts today to 70 gigawatts by 2025.’
  • ‘It vows to promote the “clean use of coal”, but does not promise to phase it out.’

More

CHINAMacroReporter

February 11, 2021
'The Biden Team Wants to Transform the Economy. Really.'
‘Biden and his more activist advisers hope to modernize key industries and counter an economic threat from China, swiftly emerging as the world’s other superpower. “The package that they put together is the closest thing we’ve had to a broad industrial policy for generations, really,” says Scott Paul, the president of the Alliance for American Manufacturing.’
keep reading
February 10, 2021
‘What the ‘Hong Kong Narrative’ gets wrong'
‘For a significant cohort of the [“pro-democracy”] protesters, the more accurate label would be “anti-China activists.” The one thing that seems to unite them is not a love of democracy, but a hatred of China.'
keep reading
February 8, 2021
Why the Anglosphere sees eye to eye on China
‘Some of America’s European allies are very wary of what they fear will be a new cold war with China. By contrast, the US is getting more support from the UK, Australia and Canada.’
keep reading
January 13, 2021
Kurt Campbell & Biden Asia Policy
In today’s issue: 1. Kurt Campbell: Biden's 'Indo-Pacific Coordinator' / 2. 'How America Can Shore Up Asian Order' by Kurt Campbell
keep reading
January 9, 2021
'Matt Pottinger resigns, but his China strategy is here to stay'
‘Even though Pottinger’s name was largely unknown to the public, his influence on U.S. foreign policy will be felt for years to come.’
keep reading
January 9, 2021
'The Relevant Organs' Pro Tip: 'You Definitely Need a Show Trial'
Spitballing here, GOP friends, but Josh Hawley, Ted Cruz, Ron Johnson and Marjorie Taylor-Greene would make an excellent Gang of Four, if you need a show trial.
keep reading
January 9, 2021
How the Chinese reacted to the incident at the Capitol
In this issue: 1. China Reacts / ‘On Double Standards’ - 'Chinese netizens jeer riot in US Capitol as "Karma," say bubbles of "democracy and freedom" have burst' - 'A Few Tweets from Hu Xijin 胡锡进, Editor of The Global Times' / 2. ‘Architect of Trump China Policy Resigns’ - 'Matt Pottinger resigns, but his China strategy is here to stay' / 3. A Pro Tip from 'The Relevant Organs' - 'Dealing with Insurrectionist Leaders the Chinese Way'
keep reading
January 9, 2021
'On Double Standards'
‘Besides, facts are there, beyond anyone's denial, regardless of whether they came up in the Chinese media reports or not.’
keep reading
January 6, 2021
'Mo money, Ma problems - Chinese trustbusters’ pursuit of Alibaba is only the start'
'Chinese trustbusters long resisted hobbling an industry seen as world-beating, and backed in Beijing. Now, as in the West, they fret that a few giants control indispensable services—e-commerce, logistics, payments, ride-hailing, food delivery, social media, messaging.’
keep reading
January 6, 2021
'Mo Money, Ma Problems'
In today’s issue: 1. Eurasia Group| ‘Top Risks of 2021’ / 2. Biden & the EU-China Investment Agreement / 3. The EU-China Investment Agreement: Pro & Con / 4. China's Antitrust Investigation into AliBaba
keep reading
January 6, 2021
PRO | 'The Importance of the EU, China Investment Deal'
‘But we should not have waited for the Biden administration to sort things out. Wait for what? We don't know if China will be more responsive if the three parties sit together. We don't have a timeline. Shall we wait another two or three years?’
keep reading
January 6, 2021
'China and E.U. Leaders Strike Investment Deal, but Political Hurdles Await'
‘China appeared eager to reach an agreement before Mr. Biden takes office in January, calculating that closer economic ties with the Europeans could forestall efforts by the new administration to come up with an allied strategy for challenging China’s trade practices and other policies.’
keep reading
January 6, 2021
'China’s Pro-Monopoly Antitrust Crusade'
‘But Chinese regulators are unlikely to stop at Alibaba; China’s entire private sector has a target on its back.’
keep reading
January 6, 2021
‘Top Risks of 2021’: CHINA
'Overall, this year will experience an expansion of a high level of US-China tensions.'
keep reading
January 6, 2021
CON | 'Europe has handed China a strategic victory'
“We’ve allowed China to drive a huge wedge between the US and Europe.”
keep reading
January 6, 2021
'With Concessions and Deals, China’s Leader Tries to Box Out Biden'
‘Mr. Biden has pledged to galvanize a coalition to confront the economic, diplomatic and military challenges that China poses. China clearly foresaw the potential threat.’
keep reading
January 5, 2021
'Sansha City in China's South China Sea Strategy: Building a System of Administrative Control'
‘Sansha City, headquartered on Woody Island in the Paracel Islands, has created a system of party-state institutions that have normalized administrative control in the South China Sea. This system ultimately allows China to govern contested areas of the South China Sea as if they were Chinese territory.’
keep reading
January 1, 2021
Competition With China Could Be Short and Sharp
‘The bad news is that over the next five to ten years, the pace of Sino-American rivalry will be torrid, and the prospect of war frighteningly real, as Beijing becomes tempted to lunge for geopolitical gain.’ / ‘Historically, the most desperate dashes have come from powers that had been on the ascent but grew worried that their time was running short.’
keep reading
October 7, 2020
'Rivers of Iron': Changing the Face of Asia
‘But what's happened now is that Southeast Asia is rich enough to contemplate such infrastructure and that the Chinese have the technology, money, and high-speed rail industry so that they can both finance or help finance and build it.’
keep reading
August 27, 2020
Why China's Economy is Growing Faster than Others
‘First is China's relatively aggressive and decisive measures on the COVID public health crisis itself that managed to get the pandemic under control much faster than the other large economies.’ ‘The relative success in controlling the pandemic translates into how much people are willing to go back to their normal lives, to their jobs, and the like.’
keep reading
May 20, 2020
The Chinese Communist Party Fears Ending Up Like the Soviet Union
‘The propaganda ministry - within four to six weeks - managed to turn China into a problem for Europeans. China’s standing in Europe is eroding by the day.'
keep reading
May 13, 2020
The Party is Infallible
'The Hong Kong demonstrations can never be because of policy mistakes by the Communist Party itself.’ During our interview, Tony Saich of the Harvard Kennedy School told me: ‘Hong Kong, with its responses to the demonstrations, and the Coronavirus are both illustrative examples of how the culture of the Communist Party and the traditions it's built up over almost a hundred years reflect the way it behaves when it's confronted by certain crises.’
keep reading
May 6, 2020
The Phase One Trade Deal
‘The good news is that 80% of our members said they thought the Phase One agreement was a good thing.' 'But only 19% said it was worth it.' 'What the 80% said they are happy about was that there no more new tariffs were coming immediately.’
keep reading
May 2, 2020
South China Sea & Taiwan
'It would not be accurate to say China claims the entire South China Sea as its sovereign territory because the Chinese are unclear about what exactly their claim is and what it is based on.'
keep reading
April 29, 2020
Why Inflation Should Not Be A Problem
‘This is a crisis where the first chair is held by the public health officials, and the second chair is held by the fiscal authorities. We at the Fed have the freedom to be able to move relatively quickly, but we're the third chair here, trying to help out where we can.’
keep reading
April 25, 2020
China, America, & the 'Jaws Syndrome'
‘Both Trump and Xi have a fundamental political divide problem that the COVID-19 epidemic has exposed and made more apparent – and made substantially worse.’
keep reading
April 22, 2020
Why We Need Stronger Global Institutions
‘The trade war was actually about the dissemination of knowledge, knowledge transfer, technological transfer.’ ‘A great irony. We need global institutions or arrangements to deal with trade, technology, and health because individuals, corporations, and national governments cannot.’
keep reading
April 18, 2020
The Pandemic's Impact on Trade
‘There are some people who would say that there was already a retreat from globalization underway.’ ‘The tools of globalization - enormous reductions in the cost of transportation and communication - remain.’ ‘But the marginal utility actually of further advances is declining – that would be one way to put it.’
keep reading
April 11, 2020
The Pandemic May Increase China's Economic Strength vis-à-vis the U.S.
‘Well, I think people around the world are rightly suspicious of the Chinese as they are probably equally suspicious of the Americans.'
keep reading
April 30, 2018
'Big lessons from the faulty analysis that spiked the Shanghai stock market'
ProTips from Andrew Polk, Trivium China On April 24, equity analysts interpreted a phrase used in a Politburo meeting readout to signal a new round of economic stimulus. And, the Shanghai stock market, one of the world's worst performers, spiked 2%. On April 25, having much earlier advised and protected clients, Andrew Polk of Trivium China published an analysis in Trivium's daily (and free) Later, Andrew and I talked about how he reached his conclusions. His explanation is a masterclass in how experience, discipline, and some tedious slogging, combined with a sound analytical framework, lead to good China analysis.
keep reading
April 18, 2018
New super-agency, National Supervision Commission—and China's massive government restructuring
'With government restructuring, the biggest thing is the creation of an entirely new branch of government: the National Supervisory Commission. Its entire job is to overlook every single public official in China. It is an institutionalization and deepening of the corruption crackdown that we've seen over the past few years.'In all, Andrew highlighted four major actions from the Two Sessions: 1.Chinese government restructuring 2.The policy roadmap 3.Personnel 4.The legislative agenda + the constitutional amendments
keep reading
April 16, 2018
The Chinese Government’s 9 Economic Policy Priorities in 2018 (and beyond)
[China Econ Observer] 1.Supply-side Structural Reform 2.Innovation 3.The “three critical battles” 4.Deepening reforms 5.Rural revitalization 6.The regional development strategy 7.Increasing consumption and improving investment 8.Opening up 9.People’s wellbeing
keep reading
April 10, 2018
U.S.-China trade dispute: Will China Weaponize the RMB and U.S. Treasury bonds?
U.S.-China trade war: collateral damageConsider the soy bean. 'China is threatened retaliatory tariffs on U.S. soybeans. The U.S. is one of the largest producers of soybeans. If China's not going to buy them, we're going to have an excess capacity.'' So, last week, we saw a soybean selloff.''But there was a complete dislocation in whole soybean supply chains. Downstream products, like soybean oil, didn't move at all in the same way.'
keep reading
April 5, 2018
Behind the U.S.-China trade dispute: 'The West's China gamble has failed.'
What's the root cause of the current friction between the U.S. and China? The West's disappointment that China did follow the western model but its own, argues Ed Tse, CEO of Gao Feng Advisory Company (a member of the China Analyst Network). [Ed's solution] look to the similarities between China and the West, especially in the tech sector, and be alert to China's evolution toward better IPR, market access, and other contentious issues, not just the remaining shortcomings. Below is a video of my discussion with Ed and excerpts from both the interview and his South China Morning Post op-ed, 'Chinese innovation with US characteristics? Maybe China and the West aren’t that far apart, in business at least.' Ed presents insights that differ greatly from the China Echo Chamber in the U.S. Let me know what you think.
keep reading
March 8, 2018
How Trump's tariffs impact China's trade/currency relations with Japan & Korea
[China markets update with TRACK's Bob Savage] 'The currency markets are embroiled in trying to figure out whether the Trump tariffs on steel and aluminum are good or bad for the U.S. economy and the U.S. stock market.'
keep reading

Heading

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Suspendisse varius enim in eros elementum tristique. Duis cursus, mi quis viverra ornare, eros dolor interdum nulla, ut commodo diam libero vitae erat. Aenean faucibus nibh et justo cursus id rutrum lorem imperdiet. Nunc ut sem vitae risus tristique posuere.