Opinion piece

Fifth Plenum maps China’s response to a more hostile world

'The Communist Party has acknowledged that the outside world now is more of a risk than an opportunity.'

Publishing date
03 November 2020

This opinion post was originally published in Asia Times.


Right before what was expected to be chaotic presidential election in the US, the 19th Central Committee of the Communist Party of China calmly, but surely, last week laid out its targets for the 14th Five-Year Plan and beyond at its Fifth Plenum, and, most important, how to achieve them.

This kind of engineering of goals and instruments, highly criticised after the collapse of the Soviet Union, is now much more fashionable thanks to the China miracle, namely the massive reduction in poverty and the doubling of income in just 10 years.

To understand the nature of the goals and instruments announced at the Fifth Plenum, nothing is more important than the sea-change in China’s external environment.

A world full of uncertainties and fears, even more so since the Covid-19 pandemic started, is fostering populism and nationalism. As a result, scapegoats are needed to explain countries’ woes, which is even more the case if you have long been the hegemon.

In other words, the decisions made in this plenum could not but address the reality of a much less favourable external environment due to growing US-China strategic competition, the US push for decoupling and, more generally, de-globalisation trends.

Among the many announcements made during the Fifth Plenum, a very meaningful target is for China to become a moderately developed country by 2035. While there is no specific definition of such a target, in terms of income per capita, the goal has widely been interpreted as around $20,000.

Independent of the exact figure, it seems clear that it is a bold target with profound consequences. By 2035, China will abandon its developing-country status and all that it entails. Such an objective can be understood as the second phase of President Xi Jinping’s goal: The Great Rejuvenation of the Chinese nation.

This objective was operationalised in the doubling of China’s income by 2020. This time around, a number of differences can be highlighted.

First, any target for per capita income hovering around $20,000 is harder to achieve, as China’s potential growth has been moving downward quite substantially since the Great Rejuvenation plan was conceived during the Third Plenum in 2013.

Although no specific growth target has been announced at this plenum, it seems clear that it will require more than what most estimates of China’s potential growth are ready to offer for the next 15 years, namely no more than 4% on average.

Second, the tools to achieve such an ambitious goal are also different, and the reason is not so much a recognition of mistakes or caveats with the tools used during the last few years, but rather the fact that the world has become a more aggressive, populist and inward-looking.

China’s response cannot possibly be the status quo, and this is exactly the message of the plenum. In fact, the guiding principle is for China to follow the US and its inward-looking policies, “dual circulation” being the buzzword for China’s economic response to the US, which ultimately equates to self-reliance.

The characterisation of self-reliance in this plenum is fourfold. First, domestic demand needs to be further boosted as external demand is increasingly unreliable. This is not only due to the United States’ push for decoupling from China but also for the huge impact of the pandemic on the global economy, including emerging economies, where Chinese exports had been growing the fastest.

Second, faster technological upgrade is needed to avoid potential bottlenecks in China’s economic development. This also implies that no effort will be spared to support innovation, both through expenditure in research and development and human capital.

Third, national security becomes an overarching concept given the increasing aggressiveness of the United States’ policies and those of its allies.

Fourth and finally, China’s involvement in global affairs needs to accommodate its ‘Weltanschauung’. In other words, China’s worldview will need to be incorporated in global governance, as China will no longer be ready to accept pre-existing rules.

China’s gyration toward a hub-and-spoke model of global relations rather than the old multilateralism, again, is not only a consequence of China’s domestic preferences, but very much depends on the rapidly changing external environment.

All in all, the Communist Party’s current objective to make China a moderately developed country can be understood as the country transitioning from a juvenile, and thus optimistic, reality, as exemplified by the Great Rejuvenation, into adulthood.

In juvenile times, the rest of the world was seen to contribute positively to China’s goals through trade, investment and the existing mechanisms of global governance. At this plenum, China has acknowledged that the rest of the world is more of a risk than an opportunity and, thus, retrenching and restraint seem to be the better options.

Furthermore, any interaction with such an aggressive world, in terms of global governance, will need to incorporate China’s economic size and related power.

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