China’s new growth plan may push economy past U.S. within a decade

The country’s 14th five-year plan is expected to center around technological innovation, economic self reliance and a cleaner
environment. Officials will also set goals for the next 15 years as
President Xi Jinping seeks to deliver on his vow for national
rejuvenation by gaining the global lead in technology and other
strategic industries.

If China’s economy — which is already recovering swiftly from the coronavirus shock — can stick to the growth trajectory of recent years,
it will surpass the U.S. within the next decade. The prospect of ever
deeper frictions with the U.S. underpins Xi’s strategy to accelerate
plans to shield China from swings in the world economy.

“It reflects China’s realist reassessment of the current global climate,” said Fred Hu, the founder of Primavera Capital Ltd., a
private-equity fund based in Beijing. “Self reliance is about developing
certain domestic capabilities through investments in R&D and
innovation, a necessary and prudent response to external uncertainties.”

“However, it doesn’t mean China will repudiate its longstanding ‘open door’ policy and turn inward,” said Hu, who previously worked for
the International Monetary Fund and led Goldman Sachs Group Inc. in
China.Xi and other officials have recently insisted the economy will
further open its doors to foreign capital and competition, reflecting
concerns about how the world will perceive the upcoming plans. In a
speech in Shenzhen this month, Xi vowed to drive technological
innovation, but softened that message by making it clear he wants a “new
open economic system.”

That desire to avoid having the new plans become the latest lightning rod in the nation’s deteriorating relations with the U.S. and
other trading rivals may mean the language around them is toned down. A
previous strategy dubbed “Made in China 2025” went dark after it
inflamed trade hawks in the Trump administration and spurred unease in
Europe and other economies at risk of losing out to increased
competition.

There’s already growing support in capitals from Washington to Canberra to restrict China’s access to strategic technologies. President
Donald Trump’s aggressive stance toward China now has bipartisan
backing and Chinese officials worry Joe Biden may be even more effective
by bringing allies together to curb its development.

Which is why the new plans “will be much less explicit and not as specific as before, because the Made in China 2025 plan had brought so
much trouble for China and helped energize the opposition from the
U.S.,” said Chen Zhiwu, director of the Asia Global Institute at the
University of Hong Kong. “So, I expect them to focus on general
guidelines and stay vague on specifics,” said Chen, who is a former
adviser to China’s State Council.

Officials have been quick to argue that what’s good for China is good for the world. Foreign ministry spokesman Zhao Lijian cited media
reports to reporters on Wednesday that said a third of Mercedes Benz
AG’s profits came from China in the third quarter and that China’s box
office sales of more than $2 billion surpassed that of North America for
the first time this year.