To be unveiled in March, plans for the next five years will power the PRC’s ambition to become the leading world economy by mid-century. Supply chain security now outranks economic growth, elevating science, technology and innovation high up the agenda. Carbon neutrality wins a faster trajectory, while urban middle-classes are urged to spend more. Foreign trade, investment and knowhow are welcomed, if only to reduce future reliance on foreign tech and imports. Marshalling these agendas to converge by 2035 demands boosting total factor productivity and a quasi-level playing field. But at more of a premium is allowing the right mix of talent into the tent under Party’s expanding control of both political and economic levers.

Key takeaways for Australian leaders:

1. China is ramping up its diversification away from what it perceives as high-risk economic partners (e.g. Five Eyes) and areas of over-exposure e.g. certain areas of technology, energy and resources, and food which it can’t produce or easily substitute

2. Near-term opportunities remain, especially where immediate diversification for China is not possible (iron ore), or where China feels it can benefit (FDI, shared R&D, albeit with a healthy dose of precaution)

3. Beijing’s carbon neutrality pledge, with other Northeast Asian economies falling in line, will hasten global moves to restrict emissions, just as it reduces Asian markets for Australia’s fossil fuels

4. The overall outlook for Australia’s economic relationship with China will not improve in the medium term, but sharp reversals are not off the cards

Read and download Open to Autarky: China's Coming 5-Year Plan now.

China Policy update 

14th 5-Year Plan: What stands out - published 12 March 2021.

The NPC (National People’s Congress) has passed the outline of the 14th 5-year plan, setting the scene for a post-COVID, post-Trump recovery. Click here to read the stand out developments.