The 14th Five Year Plan (FYP) represents the final ramp-up to China reaching economic parity with the US. As such, it is perhaps the most important one yet. Foreign businesses that align with the government’s priorities for ‘high-quality’ growth will find a profitable path ahead.
At a recent IMA China CEO Forum, a ‘China insider’ expressed his take on what the latest Five Year Plan means to international business.
What the plan’s five objectives mean to business
Knowing how China plans to guide its economy over the next five years is critical for business leaders. The latest FYP has five major objectives.
1. Invest for breakthroughs
‘China is not shy about its need to make breakthroughs in technology and innovation. Whether China achieves technology breakthrough will determine its future.’
2. Boost domestic consumption
‘Chinese exports have been the main driver of growth, but the long-term trend is for China to become a domestically-driven economy.’
3. Modernise agriculture
‘In this plan, the government will move more people to the city to consolidate land and modernise agriculture.’
4. Carbon neutrality
‘China’s carbon-neutral policy will benefit people’s quality of life and the US-China relationship. The two countries need to find common interests. If the Biden administration and China can agree on this, it will be good for the entire world.’
5. Security, security, security
‘In the plan, the word “security” is mentioned more than 40 times – more than any other word. Security in health care, defence, the economy, and technology are all crucial for the national interest.’
What three opportunities MNCs can leverage
Foreign firms in China will find the 14th Five Year Plan further strengthens strategic opportunities. Three areas particularly stand out:
1. Consumption and growing market size
‘By 2035, China’s consumption will be greater than the US and EU combined. Companies that succeed in China will be among the most successful companies in the world.’
2. Early adoption of innovation and digitalisation
‘China’s large data pool makes it powerful force in digitalisation. China has been successful with B2B digitalisation and is just getting started with B2C digitalisation.’
3. Modern agriculture
‘Companies coming from countries with modern agricultural technology (US, Canada, Australia) have an advantage as China modernises farming. However, it is important to have a local partner with local knowledge. A POE partner can negotiate with local governments to reduce learning costs.’
Click on ‘Deep Read’ at the top of the page to read more the ‘six paradoxes to watch out for’ and China’s ‘three thorny issues.’ To learn more about IMA Asia’s memberships, click here or contact us at service@imaasia.com.