Economic and Energy Targets Galore!

One drawback of being in DC is that China is 12 hours in the future. So given the big event this weekend—the national legislature meeting where it endorses that 12th Five-Year Plan—all the fine China-based folks have already published reams on it (see WSJ's China Real Time, for example). Given that I have been writing on various aspects of this plan for some time now (see here and here), both in this blog and in my day job, I better quickly dispense with one more post on the "plan" before I hit total FYP ennui.

What I have seen from statements emanating from the meeting largely comport with what I have expected since last October. A focus on income, rebalancing, sustainability, and that lower 7% GDP target—basically the themes that were settled on at the CCP plenum last fall. While some of the broad targets have been released by Xinhua, the actual plan, which is reportedly some 118 pages long, has yet to be fully revealed. So instead of rehashing what many others have already said, I thought it might be useful to simply compile all the numerical targets that I can cobble together thus far. 

Economy

GDP growth: 7%

Average per capita income increase: 7% or higher, indexed to GDP growth

Unemployment rate: 5%

New jobs: 45 million (that's larger than population of Canada!)

Urbanization rate: 51.5%, up from 47.5%

Services value added as % of GDP: +4 percentage points

R&D spending: 2.2% of GDP

Patents: 3.3 invention patents/10,000 people

Social housing: 20% penetration in urban and rural markets

Energy and environment

Total energy consumption: likely capped at 4 billion tons of coal equivalent (2010 energy 

consumption was about 3.2 billion tce)

Energy intensity per capita of GDP: -16%

Carbon intensity per capita of GDP: -17%

Non-fossil fuels as % of total energy mix: 11.4%, up from 8.3%

COD and SO2: -8%

Ammonia and nitrogen oxides: -10%

Water usage per unit of industrial value added: -30%

Arable land: maintain at 1.8 billion mu (1 acre ~ 6 mu)

Forest coverage: 21.66%

People 

Total population: maintain at 1.39 billion

Average life expectancy: +1 year

Basic urban/rural pension coverage: 357 million

Basic urban/rural insurance participation rate: +3 percentage points

Whew, targets galore. I can't speak to all the numbers here other than that many of these are likely aspirational, and of course plenty can change in five years. I do want to comment briefly on a few of the energy targets. Much has been made of the fact that former Chinese energy czar Zhang Guobao revealed that China intends to cap total energy consumption through 2015, but let's not get carried away with that proposal just yet. First of all, that target does not seem to be domestically binding, in the way that the energy and carbon intensity figures are binding—meaning it carries political weight. Moreover, even with such a cap, total energy consumption is still expected to grow 4.24% annually. And as Barbara Finamore of NRDC notes, China has attempted, and failed at, such an energy consumption contraint before in the 11th FYP. Bottom line is that for now, I would put more stock in the energy and carbon intensity and non-fossil fuels targets than the consumption cap. 

Finally, an observation on how China seems to be more sophisticated in marketing this plan, both domestically and internationally. Like I've said before, this has been branded as the "rebalancing" plan, not just for China, but for the global economy. Indeed, the official press argues that this plan should not be viewed as merely a continuation of the last one, but rather as a strategic turning point for China in the 21st century. Xinhua proclaims that the FYP gives global confidence in China's development and underscores Beijing's effort to actively shoulder global economic, political, and environmental responsibilities—obviously responding to recent critiques of China not pulling its weight and its tendency to remain a free rider. 

Yet these words will seem disingenuous if China doesn't deliver. For all the right messaging, the successful execution of the plan will be the greatest confidence-booster to the world. And I maintain that whether China registers more "successes" or "failures" will depend as much, if not more so, on a certain level of political reforms to facilitate its economic objectives. As China goes after the "high-hanging fruits" of economic development, the politics will have to necessarily follow.