Tuesday, October 20, 2015

China's 5th plenum: Aiming for higher quality, sustainable growth - HSBC

FXStreet (Bali) - Ahead of China's Fifth plenum, HSBC Global Research Economics Team, notes that growth will be the top priority, targeting to double GDP by 2020 from 2010 levels, but speeding up the reform process is a priority too for the sake of better efficiency, particularly SOE reform.

Key Quotes

"The CPC’s 18th Central Committee will hold its fifth plenary session in Beijing over October 26-29. The 13th Five-year plan (2016-20) will be top of the economic agenda."

"This plan will set out both the development targets and a timeline for implementation. This five-year period is a crucial one for building “a moderately prosperous society by 2020” (全面建成小康社会). This involves doubling per capita income and overall GDP from its 2010 level (RMB30,567 or USD4,367 equivalent); the 13th Five-year plan will focus on realising this goal."

"The leadership has made it clear that China’s economy is entering a “new normal” of slower growth, involving both strategic opportunities and tough challenges (President Xi this week called them “growing pains”)."

"China’s traditional comparative advantage – cheap labour costs and intensive resource inputs – is weakening, so new growth drivers are needed. These include upgrading the country’s industrial base, internet-driven innovation and supporting the private sector."

"The 13th Five-year plan will play an important role in laying out the policy framework for the new growth targets. The full details will not be released until the plan is approved by the National People’s Congress early next year."

"We expect the highlights to include a lower growth target, comprehensive reform plans and a detailed timeline for implementation. We also look at six themes that we believe will feature in the next five-year plan."
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