China's grand dream

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China's grand dream

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• Recent meeting of CCP: The Chinese Communist Party had a major meeting recently (5th plenum of 19th Congress), and the discussions show the direction that China wants to take in coming years. President Xi Jinping's talk of "the China Dream of great rejuvenation" amidst changing geopolitical landscape hence assumes significance. As of now, Jinping's leadership is unchallenged, and he's called a "helmsman" (only Mao was called so earlier).
• The 14th FYP: The Fourteenth Five Year Plan of China will run 2021-25, and in addition, a new 15 years long-term plan too has been adopted. Aim is to make China "a great modern socialist nation" by 2035. So clearly, Xi Jinping may not leave till 2035, situations permitting. And no successor is visible anywhere on the horizon now.
• What about GDP growth: While no specific target number was announced for GDP growth for next 5 years, the idea that China can grow at 5% per annum till 2035 was mentioned. So from a GDP of $14.9 trillion today (and per capita of $10,000), China is looking at a per capita of $30,000 by 2035. That would make China one of the richest countries, not something out of range now. The US GDP at $21 tr may not outgrow the 2% per annum average rate. 
• Strongest: Xi Jinping's overall approach is to make China the "strongest nation" by 2030. The challenges being mentioned are - 

1. keep economy growing despite the pandemic
2. overcome supply-chain problems
3. deal with an angry world
4. keep up growth during global slowdown (recession)

• Dual circulation strategy: China will now adopt this new strategy, where the domestic market will be the base for development, but foreign trade and investment will be welcomed. So more self-reliance through more domestic consumption. Technological innovation will be given primary importance.
• Key focus areas: China now wants to undertake an energy transition to becoming a carbon-neutral economy by 2060. EVs and hydrogen fuel will be pushed. Then there will be a push from consumer internet to the 'industrial internet' with widespread 5G adoption, to raise the productivity of mfg. sector. The COR (capital output ratio) in China has gone from 3.3 in 2005 to 6 in 2020 (so for 1 dollar of new GDP, 6 dollars of investment is needed). It has to be reversed for the 2035 plan to be achieved.
• The technology push: China wants to be a global leader in AI, robotics, cloud computing an quantum computing. The "Made in China 2025" plan had these already, and huge R&D expenditure is being done. 
• Public companies: China will continue to privilege the SOEs (state owned enterprises) and many will become champions in the new technology areas. But SOEs aren't quite profitable for China really.
• The road ahead: China's quick containment of Covid-19 compared to the West gives it an economic headstart. China also realises that its sheer scale and ability to depend on its domestic economy and innovative technologies will make it the most powerful country in history, ever. Given the staggering scale of this ambition, India may soon find that Quad may be not too useful for containing China.

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