This year, the 13th National People’s Congress (NPC) and National Committee of the Chinese People’s Political Consultative Conference (CPPCC) included discussions for the “Outline of the 14th Five-Year Plan” for National Economic, Social Development of the People’s Republic of China and Long-Term Goals for 2035; a discussion that comes once every 5 years.
The discussion of the 14th Five-Year Plan, attracts great attention domestically and overseas. The plan includes China’s economic and social development goals, major political moves, “Chinese voices” concerning foreign business investment in China, global trade and supply chain, as well as global economic recovery; all of which benefits international communities and foreign businessmen.
The following are some of the key points we have highlighted.
Dual circulation emphasising China’s domestic and foreign market
In May 2020, “domestic and international circulation” was first proposed, mutually promoting each other with the domestic circulation as the main element. In the first three quarters of 2020, China’s total import and export volume increased by 0.7% year-on-year, and the actual use of foreign capital increased by 5.2% year-on-year, achieving growth.
In the 14th Five Year Plan, under the guidance of China’s basic national policy of opening to the outside world, three trends will remain unchanged in the next five years,
- Expanding the use of foreign capital
- Using foreign capital on high-quality development
- The tertiary industry becoming the focus of foreign investment
Prime Minister Li Keqiang sent optimism to Chinese and foreign journalists after the “Two Sessions”, stating that China will take the initiative to open up internationally, promoting the inception of the tertiary industry, creating a market-oriented, legalised and internationalised business environment.
The 14th Five Year Plan provides guidance in multiple aspects, including stabilising processing trade, developing new business models such as cross-border e-commerce, optimising and adjusting import tax policies, seizing trade promotion opportunities such as China International Import Expo and Guangzhou Expo, as well as promoting the flow of international logistics. China will continue to expand domestic demand through various efforts, and continue to make China an important destination for foreign investment.
In addition, the structural changes in China’s domestic consumer demand is paramount to all enterprises. These changes include:
- Consumers having higher requirements for the quality of consumer products to improve their living standards
- New consumption patterns of the younger generation in tier-2 to tier-4 cities
- Increase in consumer demands by the elderly over 60 has increases, the “silver economy”
- Increase in the service industry for health and medical care, sports and cultural activities
- Urbanisation continuing to increase, especially in rural areas of China
Enterprises should focus on providing these consumers with quality products and services.
Have you heard of the “Chinese Voices”? Read part two here, or Ask LEWIS for a recap here.