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What is Five Year Plans?

2016-12-02T10:08:32+00:00

The term 'Five Year Plans' is included in the Economics edition of the Financial Dictionary. Get yours now on amazon in ebook or paperback format. Read more here...

Five year plans are economic and social roadmaps that China began issuing in 1953. These were based upon the old Soviet central planning procedures. The Soviet Union collapsed in the early 1990s. Its plans are now a historical footnote. China continues to implement these plans every five years like a clock. They consistently show the world what China is attempting to focus on and accomplish. China has a history of meeting many if not most of its five year plan goals.

The government drafts and implements its plans on many levels. These include the district, local, provincial, and central government sectors. Industry regulators are also a part of the process. Most of these government divisions have their own five year plans as well. The NDRC National Development and Reform Commission draft the central government’s plan. In these are detailed economic goals that include GDP growth rates.

Social development focuses on improvements in other important areas like education and healthcare. They come up with these specific targets after consulting with a variety of ministries and experts in industry and academia. Chinese regulators on all levels utilize these targets as they work through the implementing the period of the plan.

China spends years preparing these plans. They started talking about the goals of the 13th five year plan to run from 2016 to 2020 back in April of 2013. These plans set directions for the government priorities and policies. China met the majority of both economic and social goals they set out in the 12th FYP that concluded at the end of 2015.

These attained goals included average growth rates of seven percent, GDP services share at four percentage points higher, and seven percent annual increase to rural and urban incomes. Areas they struggled in were reducing carbon targets, raising non fossil fuels energy production, and increasing energy efficiency.

China relaxed its 35 year old one child policy as the biggest change in its current 13th FYP. This showed how the government is concerned about maintaining economic growth in the future as its population ages. For main economic targets, they set a GDP growth rate of average 6.5% per year. They also want to raise disposable income per capita by 6.5% each year. The leadership felt that this would make them into a “moderately prosperous society.”

The plan also continues on its path of reforms. Markets will have more influence and the state owned industries will be retooled. They will shift the economy to services from heavy industry. Services will represent a greater contributor towards GDP. The goal is for them to contribute 56% of the total GDP by 2020. China has also committed to lessen the state interventions into everything from account interest rates to gas prices.

They aim to increase the capacity of nuclear power to 58 gigawatts and the high speed rail network to 30,000 kilometers or 18,600 miles. The country is to build minimally 50 new airports for civilians. The government wants to develop a new 50 million urban area jobs. In support of this they want to see their urban residency rise to 60% of the whole population by the year 2020.

For other social changes China intends to significantly address the pollution problems of the past. They hope to limit energy consumption to less than five billion tons of coal equivalent. They also want to reduce their total energy consumption by 15 percent and cut carbon dioxide emissions by 18%. All of this working together is supposed to improve their sometimes horribly polluted air. The goal for city air quality is to see it rated at a minimally good rating for 80% of the time.

The term 'Five Year Plans' is included in the Economics edition of the Financial Dictionary. You can get your copy on amazon in Kindle or Paperback version. See more details here.