China's top leaders meet to plan strategy amid Covid-19, tension with US

This comes as China emerges from a devastating pandemic and braces for a decoupling with the US.
This comes as China emerges from a devastating pandemic and braces for a decoupling with the US.PHOTO: AFP

BEIJING - China's top leaders are meeting this week to set a course for the country's economic and social development in the near and longer term.

This comes as it emerges from a devastating pandemic and braces for a decoupling with the United States.

Investors, environmentalists and China watchers will be tuning in as the leadership endorses its next five-year plan and an even bigger blueprint that will guide them to 2035.

The Fifth Plenum, which started on Monday (Oct 26) and ends on Thursday, is one of the most important events on the Chinese Communist Party calendar as its political elite gather to discuss a wide range of issues, including personnel changes and succession plans.

Beijing is expected to double down on its "dual circulation" strategy in the face of greater global uncertainty and ramp up indigenous innovation in a bid for self-reliance, whether in tech, food security or energy.

It will continue boosting domestic consumption, as well as courting foreign investment and "engaging with the external economy", said President Xi Jinping during his tour of the southern provinces two weeks ago.

"I think the Chinese government will emphasise the diversification of trade partners and attract non-US foreign trade investments," said Assistant Professor Lee Jonghyuk, who studies Chinese politics and economy at the S. Rajaratnam School of International Studies.

"However, the trade diversification, mainly through the Belt and Road Initiative, was significantly limited by the pandemic and global recession," he added.

The initiative is a signature project of President Xi's to connect China with other countries through old and new trade routes.

The Chinese economy is gradually recovering but remains vulnerable in the wake of the Covid-19 outbreak.

Its gross domestic product shrank by 6.8 per cent year on year in the first quarter but subsequently rebounded, posting 3.2 per cent growth in the second quarter and 4.9 per cent growth in the third quarter.

Analysts had predicted as much as a 5.5 per cent expansion in the latest quarter. While below target, it is still the world's best performer.

China will undoubtedly set a higher target for its research and development spending in the upcoming 14th Five-year Plan, as it seeks to reduce dependence on foreign technology and as its tech war with the US roils on, said Mr Bert Hofman, the director of the East Asian Institute at the National University of Singapore.

"China is well under way to becoming a technological powerhouse. The country now spends some 2.2 per cent of GDP on R&D, and the 2.5 per cent target of the 13th Five-year Plan may still be reached this year," he said, adding that the new target could be 3 per cent.

On the political front, Taiwan's decision-makers will also be watching the plenum for mention of reunification in the 2035 blueprint.

There is currently no known timetable for reunification between China and Taiwan, a self-ruled island Beijing has claimed as its own since 1949.

Taiwan has become a regional flashpoint amid deteriorating relations between Beijing and Washington.

President Xi Jinping marked the 70th anniversary of the start of the Korean War last Friday with a warning that China will never allow its sovereignty, security and development interests be undermined.

"Let the world know that 'the people of China are now organised and are not to be trifled with'," Mr Xi said, invoking Mao Zedong, the founding father of the People's Republic of China.

Personnel changes are also in the mix at the Fifth Plenum, with China's top state planner He Lifeng, a political ally of President Xi Jinping, expected to step down soon, two sources with ties to the Chinese leadership told The Straits Times.

Mr He, 65, minister of the powerful National Development and Reform Commission (NDRC) under the Cabinet since 2017, is tipped to be succeeded by another mentee of President Xi, Mr Tang Dengjie, 56, who was named NDRC vice-minister in July this year.

The change of guard could happen as early as the end of this week's meeting or during the annual full session of Parliament next March, the sources said, speaking on condition of anonymity.

From 1986 to 1995, Mr Tang was with a Shanghai-based joint venture between German automaker Volkswagen and state-owned enterprise SAIC Motor Corp, rising to assistant manager for planning and development in 1994.

"Tang Dengjie taking over the NDRC will be a boon for China's auto industry," one source said.

The China Association of Automotive Manufacturers has urged the government to boost support for exports of China-made automobiles, according to a report seen by ST.

China overtook the US as the world's largest auto market in 2010, but its automobile exports are negligible.

The report also called for backing the manufacture of electric vehicles and for smart car technologies, but did not mention a dollar figure.

The automobile industry body sent the report to the NDRC, the Ministry of Commerce and the Ministry of Industry and Information Technology for inclusion into the 14th Five-year Plan that will be endorsed at the plenum.

Several politicians who have reached the compulsory retirement age of 65 for Cabinet ministers and provincial party secretaries are also expected to step down, the sources said.

These include the party secretaries of Guizhou, Hunan, Inner Mongolia, Jilin and Yunnan provinces, who will leave as part of a sweeping reshuffle ahead of the party's 2022 congress, which is held once every five years.