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China: did everything go according to five-year plan?

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Via Financial Times

Over the past decade the Chinese Communist party has relaxed its control over swaths of the country’s economy and society. Despite that, Beijing’s penchant for setting long-term targets on everything from grain output to carbon emissions is as fervent as ever.

This year is particularly important for such goals, because 2020 will mark the end of China’s current five-year development plan. The government also wants to achieve several economic milestones in time for the 2021 centenary of the party’s establishment.

Outside observers have long taken China’s official data with a big pinch of salt. One 2019 study said that government figures may have overstated inflation-adjusted GDP by 2 percentage points every year from 2008 to 2016. 

Still, experts say government targets — which range from headline economic growth to availability of toilets for tourists — provide invaluable insight into Beijing’s priorities.

GDP: Doubling in a decade

Xi Jinping, China’s most powerful leader in more than a generation, has downplayed the importance of GDP growth, instead emphasising environmental protection and financial stability. Even so, Mr Xi inherited a hard growth target from his predecessor. 

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Former president Hu Jintao in 2012 decreed that China’s national GDP would double between 2010 and 2020. To meet that, China’s economy needed to grow 7.5 per cent on average every year.

The decade got off to a great start, with growth hitting 10.3 per cent in 2010. But economic expansion has since slowed markedly — at 6 per cent, it was the weakest in 30 years in the third quarter of 2019.

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China is set to announce its full-year 2019 GDP growth on January 17 and it is expected to come in at 6 to 6.5 per cent. If it does, the economy will in 2020 be able to grow at below 6 per cent and still achieve Mr Hu’s 2020 goal. 

Poverty elimination

One of Mr Xi’s main policies has been to tackle poverty. He pledged in 2015 to cut the number of people with a yearly income of less than Rmb2,300 ($335) from more than 50m to zero by 2020.

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As part of that process the government planned to move 10m people from remote villages to urban areas for better-paying jobs in industries such as tourism and manufacturing.

What is less clear is how successful the five-year campaign has been. “Top Chinese officials will claim total victory and the [official] statistics will back this claim. Nevertheless, the poor will always be among us,” John Donaldson, a professor at Singapore Management University wrote in an assessment of the campaign last year.

Environment: limiting coal use

China is by far the world’s largest coal consumer and efforts to wean itself off the energy source have big ramifications on global efforts to slow climate change. 

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Beijing wants to cut the proportion of coal in its mix of energy sources to below 58 per cent by the end of 2020, replacing it with renewable energy. Coal’s share has fallen from nearly 70 per cent to less than 60 per cent over the past decade. 

But some sources claim that China’s use of coal is still rising in absolute terms. A report published in November by Global Energy Monitor, a non-profit group, found that China was still opening new coal plants at a faster pace than the rest of the world was closing them.

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Beijing has yet to set an absolute target for cutting carbon emissions, only pledging that they will peak by around 2030. By then about one-fifth of the country’s energy will come from non-fossil fuel sources, the Chinese government has claimed.

Urban housing

China’s property market makes a huge contribution to the world’s second-biggest economy and it has the potential to lift or decimate global prices for commodities like cement and steel. In 2018, the value of residential sales alone in the country hit almost $2tn, according to official data.

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An important recent catalyst for the market has been a government initiative to demolish and redevelop tens of millions of dilapidated residences labelled as slums.

The scheme has so far seen about 100m people rehoused and the government has said that the renovation of all urban slum areas will be complete by the end of this year.

Officials had originally pledged to build or renovate a further 15m homes between 2018-20, but that target has since been slashed to around 10m after a surge in construction has left local governments saddled with debt.

Toilet revolution

Mr Xi proclaimed a “toilet revolution” in 2015 when he vowed to improve facilities in rural regions and at tourist sites. Authorities splashed Rmb1.8bn ($260m) on new toilets between 2015-17.

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China’s National Tourism Administration has said it will rebuild or refurbish 64,000 toilets at tourism attractions between 2018 and 2020. The administration has said it is already more than two-thirds of the way toward this target.

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