The first glimpse into China’s economic plans for the next five and 15 years will be unveiled Thursday when initial details are released on how the country will steer growth and develop industry in the face of an antagonistic external environment, Bloomberg has reported.
The news follows the CCP’s 5th Plenum with a focus on the next Five-Year Plan and 2035 vision.
Obviously, the growth target was likely to be diluted and instead, the quality, productivity, equity, sustainability and security was expected to be stressed.
Markets were expecting that China may promote domestic demand, innovation and the Renminbi’s role to reduce external dependence.
In recent times, the People’s Bank of China has been pledging to look beyond business cycles and keep normal policy for as long as possible.
With the economic recovery on a firm footing, China’s leadership is shifting its focus to medium-term challenges.
The Chinese Communist Party’s (CCP’s) 19th Congress will has been holding its 5th Plenum from 26-29 October, with the 14th Five-Year Plan (FYP, 2021-25) dominating the agenda, analysts at Standard Charted bank explained.
”In response to a less-friendly current global backdrop –especially the US bipartisan consensus on containing China’s power – China appears determined to bolster its domestic market and technology to ensure its supply-chain security, while preventing decoupling by opening up its market further.”
“China realizes now it is vulnerable,” said Wang Huiyao, an adviser to China’s cabinet and founder of the Center for China and Globalization, referring to sanctions levied on Chinese companies.
“So leaders have to be prepared for things like technology decoupling,” Bloomberg wrote.
”Typically, a broad outline of the proposals is released at the close of the meeting…More details emerge in the week after when state media release a comprehensive development plan.”
”The full picture won’t come to light until the national legislature puts its own stamp on the plan this coming spring.”
Market implications
Meanwhile, investors and businesses are watching for signals on policies that may shape global demand at the same time that the coronavirus is spreading again like wildfire.
The Aussie and NZD are an interesting focus considering how closely tied they are to China.
Moreover, comparably, they have a clean bill of health when it comes to the second wave of covid which could stand them in good stead looking forward, something which analysts at ANZ touched on today:
”The risk-aversion move is understandable as we noted yesterday, but if global lockdown fears and broad concerns about the pandemic continuing to rage and New Zealand doing a better job at containing it, we’d expect the NZD to do better as it did in May.”