China Proposes 5 Year Plan to Develop 7 Industries, Upgrade Indigenous Innovation

(The document, the Proposal for Formulating the 12th Five-Year Program for China's Economic and Social Development (2011-2015), was adopted at the Fifth Plenum of the 17th CPC Central Committee.)

Economic Strategic Restructuring Should be a Major Task

According to the CPC Central Committee's proposed "basic requirements" for the five-year plan, economic strategic restructuring should be a major task in the transformation, which requires China to expand domestic consumption effectively, strengthen agriculture, grow emerging industries of strategic importance and prudently proceed with urbanization.

Indigenous Research and Innovation Should be Upgraded

To support the transformation, China should upgrade its capabilities in indigenous research and innovation¹ in science, technology and administration, train more innovative talents and improve education for workers, said the proposal.

Development Should be Resource-Saving and Green

In transforming the economic development mode, the importance of building a resource-saving and environment-friendly society should be stressed to save energy, reduce greenhouse emissions and actively tackle global climate change.

Mutually Beneficial Arrangements with International Community

The CPC Central Committee also proposed that economic, political, cultural and social reforms should be resolutely pushed forward. It stressed the implementation of mutually-beneficial and win-win opening policy and working with the international community to cope with global challenges.

Seven New Strategic Industries Should be Developed

The Committee has also proposed that China nurture and develop seven new strategic industries with favorable policies in the next five years in the following industries: (1) new-generation information technology; (2) energy-saving and environment protection; (3) new energy; (4) biology; (5) high-end equipment manufacturing; (6) new materials; and (7) new-energy cars.

In order to implement the plan, the Committee stated that China would:

• boost policy support and planning guidance to promote research and development in key technologies and develop the seven strategic sectors into pillar industries to improve industry core competitiveness and economic efficiency.
• put forward fiscal, tax and financial policies to support major state-level science and technology projects and domestic indigenous innovation to promote the development of high-tech industries, it added.
• improve fair, disciplined and transparent market access standards, and adjust tax and pricing systems for land, water and electricity to drive growth in the services sector, it said.
• support technology innovation and reasonably guide mergers and acquisitions to increase manufacturing industry concentration.
• speed up new energy development and promote clean and efficient use of traditional energy, develop hydroelectric and nuclear power, and increase strategic oil reserves.
• scientifically plan marine economic development concerning sectors like oil and gas, transport and fishing, reasonably develop and use marine resources and protect the marine environment.
• speed up education reform and give full play to human resources to make the economy more driven by science and technology innovation.
• unveil tax and fiscal policies to support business innovation and industrialization of scientific research and increase government spending on basic research.
• invest more in improving education quality and reasonably allocate education resources to narrow the gap between rural and urban areas.

¹In November 2009, China’s government issued a “Notice Regarding the Launch of National Indigenous Innovation Product Accreditation Work for 2009,” which was a draft central-level procurement catalogue “that would have made it virtually impossible for any non-Chinese supplier of a covered product to participate in Chinese government procurement”.

In April 2010, the requirements were relaxed to allow indigenous innovation accreditation for products based on IP that had been licensed for use in China from overseas. However, the U.S.-China Business Council still has concerns, and recently noted that since very few goods produced by foreign-owned companies have made local government procurement lists, it seems that the policy is intended to skew competition for government purchases in favor of Chinese companies. (See ITT’s Online Archives or 10/20/10 news, 10102008, for BP summary of trade complaints to USTR regarding China’s WTO commitments.)

The press release on the basic requirements for the plan is available here.

The press release on the development of the seven industries is available here.