Introducing China's Newest Five-Year Plan

Since 1953, Chinese economic planners have undertaken the time-honored exercise of drafting a five-year plan. These plans provide a blueprint for a domestic economic agenda that is supposed to be executed by China's behemoth bureaucracy and provincial leaders, with the premier at the helm. Each ministry under the cabinet then issues its own detailed FYP--usually incorporating specific targets--based on the themes and tones set in the overarching framework. 

Last week, the Communist Party formally endorsed the latest FYP, China's 12th, in an important closed-door meeting that also included nominating the next Chinese president. Yesterday, the Chinese government finally published the FYP document (in Chinese only) that it adopted at the meeting [no English version is available yet, will link when possible. For now, see here for coverage of it]. There is plenty to say about the contents of this plan, especially because it has been touted as the plan for "economic rebalancing"--which would require fairly substantial transformations of the Chinese economy into a more consumption-driven economy. As has been noted repeatedly, one of the fundamental global imbalances today--a central problem to which the upcoming G20 meeting in Seoul will attempt to find a common solution--is the over-production or surplus in China and the over-consumption in the United States. To the extent that China succeeds in the so-called "rebalancing" act by successfully executing its new economic agenda, then it will naturally help deflate some of the tensions in the global economy over the next several years. And yes, sustained currency appreciation will have to be part of that rebalancing agenda.   

More to come on all that and more. But for now, I'd like to point out an interesting nugget in this latest 12th FYP. It dedicates a specific section to the promotion of Chinese culture industries and "soft power." I do not recall that this "soft power" issue merited its own standalone category in the last FYP, which indicates that someone really wanted this to be prominently emphasized in the new plan. I would say that this falls into the "aspirational" category of the plan, though it is an aspiration that China has taken increasingly seriously, particularly after the financial crisis. 

Of course, the notion that you can plan to achieve soft power through the development of Chinese culture and associated industries seems strange and in all likelihood counterproductive. The idea that an economic maestro can engineer some kind of cultural renaissance seems like it is being set up to fail. What's more, the plan is vague and offers no details on how China intends to create an environment that is conducive to sustaining a vibrant and resilient culture industry. Ok, so creating a robust culture industry is important. Fair enough. But then the plan wades into some questionable elements like "emphasize the creation of new media and internet industries...and correctly handle public opinion guidance." This is of course stodgy party speak and code for "culture is good, but it needs to be closely guided by the state." Hmm.

More likely, this search for culture and "Chinese values" reflects the state of 21st century Chinese society. More than a few in China have bemoaned that the country is ideologically bankrupt and its people unsure of what values should be adopted. There is reluctance to accept "universal values" wholesale, which is generally equated with "western" values, and an incessant search for the Chinese way. Some fall back on the Chinese brand of pragmatism, but even that isn't sufficient. In short, China seems to be exhibiting symptoms of an identity crisis, though it's difficult to define precisely what that crisis is nor assess its scope and severity. 

I think most sensible Americans can probably come to a general consensus on what the "American idea" constitutes (yes, yes, discounting the current moment of bitter partisan rancor) or at least articulate some of its defining elements. But what is the "Chinese idea"? I think there's an earnest effort underway to figure it out.

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Damien Ma is a fellow at the Paulson Institute, where he focuses on investment and policy programs, and on the Institute's research and think-tank activities. Previously, he was a lead China analyst at Eurasia Group, a political risk research and advisory firm.

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