BOFIT Weekly Review 2015/45
China’s latest five-year plan features two-child policy and economic reforms
At the end of October, the Central Committee of the Chinese Communist Party finalised its proposed 2016–2020 five-year plan. The draft plan emphasises the importance of sustainable high growth, thereby implying a need to continue economic reforms and open the economy further to international competition. In the financial markets, capital movements are to be freed further and international use of the yuan promoted. Foreign investment will be attracted through implementing a “negative list” access model that more clearly delineates branches where foreign firms are not allowed to invest and deregulates all other branches.
The decision to end the controversial one-child policy, introduced at the national level in 1979, has attracted considerable attention. From now on, a Chinese couple can as a rule have two kids. Although the motivation for the decision is China’s aging population, encouraging more births will not bring rapid demographic change. Indeed, it remains to be seen what effect the change will have on the birth rate, given that the costs of having a child and the challenges of arranging day-care make the one-child option attractive to many parents. The decision however provides perspective on China’s development and the possibility to focus on implementation of other reforms.
In other respects, the latest plan themes are familiar and general in nature, e.g. eliminating poverty, narrowing income inequality, improving healthcare and increasing vocational training opportunities. There are also plans to widen social security and pension coverage, as well as intent to gradually increase the retirement age. The new five-year plan places heavy emphasis on improving the environment but there is no room for political reforms in the draft.
The National People’s Congress is expected to ratify the new five-year plan when it convenes next March.