Yes, China Will Adjust Course 

As the world fixated on the US presidential election on November 3, China dropped its 14th Five-Year Plan (FYP) on the same day, all but ensuring that virtually no attention was paid to it.  

Those who did pay attention mainly focused on the “dual circulation” concept. But equal attention should be devoted to the one refrain that continues to stand out among the flurry of official explainers and documents centered on the 14th FYP: “getting China’s own house in order (办好自己的事)”.  

External environment  

That mantra not only reflects a redoubling on domestic priorities, it also telegraphs Beijing’s discernible concern over the external environment. In fact, MacroPolo’s recent 2025 Forecast noted that a key factor that will drive Beijing’s behavior will be the fact that it “faces its toughest external environment in about a generation…[and] likely can no longer count on a relatively stable external environment.”  

The Chinese Communist Party seems to hold a similar assessment. Take, for example, its own 2×2 “SWOT” breakdown (see Table).Source: People’s Daily CCP microsite.  

Most of the “opportunity” column are pablum on general secular trends, not actual opportunities. But the single “external threat” specified is the bleaker external environment, which would explain the inclusion of “to proactively build a more favorable external environment” in the 14th FYP opinion, a provision that was not in the 13th FYP. In CCP speak, this is probably about as explicit an admission as we’ll get on the need to stabilize relations with major economies.     

Growth target 

Omission is just as important as inclusion in such plans to gauge the balance between continuity and change. Among the litany of longstanding problems on the domestic front, what’s notable is the notable absence of an implied growth target. In contrast to the 13th FYP opinion that included “doubling GDP in 2020 from the 2010 level,” which meant maintaining a specific growth target, the 14th FYP opinion simply states “achieving new results in economic development…”   

Of particular interest is Xi Jinping’s official explainer on the growth target. He acknowledged that internally many had suggested including a specific target for the next five years. But rather than focusing on a target, the Central Committee decided that importance should be placed on structural adjustment, quality, and efficiency.  

It appears that Xi may have vetoed the inclusion of a target in order to set different expectations on the Chinese economy and send a strong political message on what the real focus should be. At this point, even if a concrete growth target is ultimately included in the full plan in March 2021, it will likely be the least important it has been in decades.  

A deemphasis on the growth target is a significant leading indicator of adjustment, and that adjustment is made all the more pressing because of the CCP’s assessment of the external environment. In the first ever post-Plenum press conference by the CCP Central Committee, it emphasized that adjustments are needed to realize its 2035 vision. And in the usual op-eds that follow these confabs, the CCP has argued that even the “four comprehensives” strategy is not fixed in stone but need to be altered accordingly as the goal post changes 

All of this points to a CCP that appears to be taking pains to rationalize the need for course adjustment, because ending the era of businessasusual is not an easy pill to swallow. Adjustment in this case will touch the third rail of reforms such as income redistribution and entrenched state monopolies, among others, which have long lagged precisely because they are so difficult and politically charged.   

Beijing exuded confidence in its 2035 vision of creating a large middle class and reaching high-income status, but the tone of the 14th FYP is different. It was less a litany of “what needs to be done” and more of a call to action to execute on long overdue and difficult structural adjustments.  

Its latest best-laid plan is a more sober recognition of the reality that China will no longer count on growth to bail it out. Without tackling the accumulated problems and bottlenecks in the political economy, Beijing’s 15-year vision will largely dwell in the realm of aspiration.  

Damien Ma is the director of MacroPolo. You can find his work on energy, politics, and other topics here.

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