HONG KONG (AP) — China’s leaders are vowing to reduce its reliance on foreign advanced technology and spur stronger domestic demand as it weathers “high winds” amid elevated trade tensions with the U.S.
An outline of the ruling Communist Party’s blueprint for the next five years was laid out in a 5,000-word communique released Thursday after a four-day top level meeting in Beijing, just days ahead of planned talks between Chinese leader Xi Jinping and U.S. President Donald Trump.
Five-year plans are a throwback to the days of Soviet-style central planning. China still relies heavily on them to map out policy priorities and decide on funding. Party “plenum” meetings like the one held this week also are used to rally the party rank-and-file around Xi’s leadership.
Thursday’s announcement signaled no major policy shifts. Despite mounting trade tensions, China intends to remain a global manufacturing power while building stronger economic growth at home.
The communique does not refer directly to the trade war between Beijing and Washington, but warns of rising “uncertainties and unforeseen factors.”
Han Wenxiu, a senior party official in financial and economic policy, told reporters Friday that China is well placed to handle such risks in an era when great-power competition is becoming more complex and “the international balance of power is undergoing profound adjustments.”
He predicted China’s strength and international status would grow in the next five years. “There is always opportunity in crisis and crisis can be turned into opportunity,” Han said.
Chi Lo, an Asia Pacific senior market strategist at BNP Paribas Asset Management, said an emphasis in the communique on substantial improvements in scientific and technological self-reliance likely reflects confidence that China is less vulnerable to pressure from the trade war.
The party vowed to achieve “markedly stronger” international influence by 2035 and to safeguard the multilateral trading system, portraying Beijing as a defender of free trade, noted Leah Fahy, a China economist at Capital Economics.
A downturn in the property sector that began while China was still in the midst of disruptions from the COVID-19 pandemic has sapped consumer confidence, reducing household wealth and leading to widespread layoffs.
China’s communique emphasized the strategic need to expand domestic demand. The government has already encouraged investment to modernize factories and paid subsidies to people who replace old appliances and vehicles with new ones.
“The economies of major countries are all driven by domestic demand and the market is the most scarce resource in today’s world,” said Zheng Shanjie, head of the National Development and Reform Commission, Beijing’s main planning agency.
But manufacturing capacity exceeds demand in many industries. That has caused damaging price wars and led companies to boost exports, adding to trade tensions with the U.S., the European Union and others.
Even with strong government support, the economy grew 4.8% in the last quarter, the slowest pace in a year. Factory activity shrank for the sixth consecutive month in September, as domestic demand remained sluggish.
China’s leaders have stuck to their goal of attaining the status of a “mid-level developed country” and doubling the size of the economy in 2020 by 2035.
That implies an average annual growth rate of about 4-5% in the next decade, said Lynn Song, chief economist for Greater China at ING Bank.
China will remain a manufacturing juggernaut China is the world’s biggest manufacturer, accounting for roughly 30% of global production and about a quarter of its overall economy. The new 5-year plan calls for keeping manufacturing at an “appropriate level” with advanced industries as the backbone.
China’s focus on the manufacturing sector “will remain a top priority, even in the face of overcapacity (and) price wars,” said Fahy of Capital Economics.
Over the years, Chinese manufacturing has progressed from labor-intensive, low-cost production to higher-value products including electric vehicles, robots and batteries. In coming years, the emphasis will be on advanced manufacturing, said Robin Xing, chief China economist at Morgan Stanley.