Source: Tao Chuan, Shao Xiang, Zhong Yu Mei, Wu Shuo
Author: ChuanYue Global Macro
The draft proposal for the 15th Five-Year Plan makes a significant adjustment in strategic priorities by placing 'industry' ahead of 'technology,' explicitly prioritizing the enhancement of traditional industries. This underscores an overarching focus on economic development as the central task. For the first time, the plan sets a quantitative target of increasing the household consumption rate by approximately five percentage points and elevates the concept of a 'financial power' to the strategic level, emphasizing the strengthening of the economy’s internal momentum through asset pricing control and wealth effect creation, while expanding high-level opening-up to support enterprises in competing globally.
What clear guidance does today's published proposal provide for economic work during the 15th Five-Year Plan period? We believe that, centered around the two core tasks of 'strategic initiative' and 'major breakthroughs,' new signals have emerged across five domains: industry, consumption, technology, finance, and openness:
What signal is conveyed by placing 'industry' at the top? The 15th Five-Year Plan deliberately places 'industry' ahead of 'technology,' with a priority on 'enhancing traditional industries.' Maintaining economic growth within a reasonable range and steadily improving total factor productivity are the primary goals of the 15th Five-Year Plan, signifying a focus on economic development as the core mission, with an emphasis on the real economy. Simply achieving technological self-reliance does not equate to a thriving economy; more crucially, it involves 'developing new forms of productive forces according to local conditions,' adding 'new dimensions' to traditional industries, and on this basis, nurturing and expanding emerging and future industries.
Emerging industries are set to become pillars, while future industries emphasize 'forward-looking planning.' The former represents the key focus of transforming old and new drivers of growth, forming industrial clusters in areas such as new energy, new materials, aerospace, and low-altitude economies. The latter focuses on seizing opportunities and taking the initiative, with key layouts in quantum technology, biomanufacturing, hydrogen energy and nuclear fusion, brain-computer interfaces, embodied intelligence, and sixth-generation mobile communications.
First explicit goal to increase household consumption rate: What is the potential? We estimate that over the next five years, the household consumption rate (the proportion of household consumption expenditure in GDP) will increase by at least about five percentage points, and the Outline may set relevant indicative targets.
How was this calculated? According to the Fourth Plenary Session plan, by 2035, China's per capita GDP will reach the level of moderately developed countries. During the same period, the average household consumption ratio of major developed economies is approximately 54%, indicating that China’s household consumption rate still has potential room for improvement of about 14 percentage points.
How will this be implemented? Releasing consumer willingness remains a priority over enhancing consumer capacity. In terms of promoting consumption, greater emphasis is placed on stimulating willingness, such as 'eliminating unreasonable restrictions on automobile and housing consumption,' 'implementing paid staggered vacations,' and optimizing consumption scenarios. Conversely, there is relatively limited elaboration on new measures to boost household income, reflecting that current policies are more focused on unleashing rather than expanding consumer purchasing power.
How will technology achieve 'self-reliance and strength'? As a core component of high-quality development, the key lies in seizing high ground and leading the future.
How to seize the high ground? On one hand, focus on the historical opportunities presented by a new round of technological revolution and industrial transformation, using AI and green development as key drivers to capture the commanding heights of global technological advancement. On the other hand, from the perspective of national security and strategy, adopt a new nationwide system to strengthen and fill gaps in critical core areas such as integrated circuits and machine tools.
How to lead the future? Beyond technological breakthroughs, it is perhaps more important to promote the comprehensive integration of industry, academia, and research. The state should leverage its coordinating power in fundamental research, while enterprises need to become innovation leaders, actively implementing and advancing scientific and technological innovations.
Why does the concept of a 'financial power' appear for the first time in the 15th Five-Year Plan? The elevation of the 'financial power' strategy is not only reflected in the acceleration of related deployments this year but has also been 'foreshadowed' in recent communications from the Financial Stability and Development Committee and the central bank regarding the spirit of the plenary session.
On one hand, the current strategic rivalry between China and the United States has entered a phase of stalemate, with U.S. pressure in traditional areas such as the economy and technology yielding diminishing returns. Its true relative advantage may increasingly lie in the financial sector, but this advantage comes at a high cost and cannot be easily utilized, objectively providing a window of opportunity for us to advance financial autonomy.
On the other hand, the construction of a 'financial power' can achieve dual breakthroughs in 'pricing power' and the 'wealth effect.' We must maintain autonomous control over the pricing of core assets to prevent the loss of pricing authority, while also enabling the stock market to become a significant source of property income for residents, further boosting consumer confidence.
The prioritization of 'high-level opening-up' has increased, bringing benefits to companies going global and China’s 're-globalization.' Compared to the 14th Five-Year Plan, the 15th Five-Year Plan period significantly elevates the level of 'high-level opening-up,' with the tone shifting from basic 'implementation' to a more proactive 'expansion.' To 'gain strategic initiative in intense international competition,' openness must continue to 'expand' and emphasize 'win-win' outcomes, supporting companies in 'going out' while retaining core industrial chains domestically. Actively promoting China's 're-globalization' helps shape certainty for itself.
Editor/melody