Will the 12th Five-year Plan live up to its goals?

The PRC Outline of the 12th Five-year Plan for National Economic and Social Development (中华人民共和国国民经济和社会发展第十二个五年规划纲要) redefines China's strategy for growth in the five years from 2011 to 2015, and beyond. The Plan continues the rhetoric of its predecessor, but places more emphasis on sustainable growth. Of the 28 targets in the Plan, more than half relate to improvements in environment and living standards. Ten of these qualitative targets did not appear in the previous Plan. One new initiative originating from the State Council's Decision to Accelerate the Fostering and Development of Strategic Emerging Industries（国务院关于加快培育和发展战略性新兴产业的决定）is the identification of seven strategic emerging industries (SEIs – see figure 1) to capitalise on China's domestic market.

The bulk of the developments in relation to the Plan remain at a conceptual level. On specific implementation and necessary reform in other aspects of the economy not addressed by the Plan, like the structural reforms needed to convert micro-initiatives into financially viable projects, many details have yet to be worked out. The National Development and Reform Commission (NDRC) is developing, in the SEI Key Products and Services Guidance Catalogue (Draft for Public Comments)（战略性新兴产业重点产品和服务指导目录 (公开征求意见稿)), a catalogue of 139 SEI sectors, building on the Plan's broad descriptions to structure and manage specific incentives and licensing requirements.

Halfway into the Plan's term, its success remains an open question. This is due to the lack of specific details to date and a narrow focus on direct financial incentives and subsidies without fully addressing fundamental imbalances. For example, the lack of a level playing field between private companies and state-owned enterprises (SOEs). The key successes of the Plan are in areas where policies existed and were tested before the Plan affirmed them, such as in certain high-end equipment sectors. It is possible, however, to infer general principles guiding future reforms from the Plan. There will be a focus on sustainable development rather than growth for its own sake and a quest to boost consumption's share of the economy through redistribution. Foreign direct investment will increasingly be assessed by how far it will help China fulfil the Plan's goals.