Few countries could have shaken off the negative effects produced by the Covid-19 crisis as rapidly as China. While the majority of countries had to suffer significant downturns in the second quarter of the year, the gross domestic product (GDP) of the Middle Kingdom grew by 3.2%. That positive trend has continued, with GDP rising a further 4.9% between July and September. The experts at the International Monetary Fund (IMF) anticipate that China will also be the only major economic power able to record growth in the year as a whole. In 2021 its economy is expected to pick up even further pace and expand by 8.4%. That the Chinese economy is continuing to recover is evident from the purchase managers index, which shows 51.4 points for industry in October. A figure above 50 indicates growth. According to economists, the upturn is being driven by government stimuli such as the expansion of infrastructure and robust exports. The barometer for the service sector shows an even stronger trend, improving to 56.2 points.
China's National People's Congress met back at the end of May, right in the middle of the coronavirus pandemic, to put the superpower on the right track for the next few years. Following another four-day consultative session in October, Beijing then presented its new Five-Year Plan, which is to be formally adopted at the annual conference of the People's Congress in March 2021. This is already the 14th iteration of the communiqué and, given the trade tensions between China and the USA along with the virus crisis, the future strategy was awaited with particular interest this time. The central point made by party and government chief Xi Jinping is that the country is to become less dependent on the global market in the future. That means the world's second largest economy is going down a new route.
The government is pursuing a "dual cycle" strategy. While on the one hand the Central Committee of the Communist Party of China wants to continue opening the country outwards, on the other it is particularly keen to strengthen the domestic market. Home-grown innovation is intended not only to ensure greater independence, but actually to be the main driver of the economy. The technological independence and economic autonomy of the country could also be understood as a response to the trade war with the USA. Although no precise growth target was mentioned, as was the case in previous Five-Year Plans, the plenary session of the Central Committee has signalled its intention to make the country's development more sustainable and of higher quality going forward.
The long-propagated "green transformation" and the "establishment of an ecological civilisation" are also reflected in the plan. Solar, wind and water power stations are also to take on greater importance in the future. President Xi Jinping had already announced in September that China wanted to achieve climate neutrality "before 2060". The planned "socialist modernisation" is to be completed even sooner. Beijing had already presented the "China Standards 2035" programme a good two years previously. It aims to set the standards in key areas such as industry 4.0, mobile communication and renewable energies in the future.
Source: IMF
