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1 [1] (November 12, 2020)

handle is hein.crs/govdcom0001 and id is 1 raw text is: China's 14th Five-Year Plan: A First Look The Communist Party of China (CPC)'s 19th Central Committee -a body of China's 376 top Party officials held its 5t Plenum in late October 2020 to deliberate on China's 14 Five-Year Plan (FYP) for 2021-2025 and economic goals out to 2035. China's annual Central Economic Work Conference is to review the plans in December before they are unveiled at the annual session of China's legislature in March 2021. Initial details suggest that Chinese leaders plan to expand the state's role in the economy and advance national economic security interests; use market restrictions and its One Belt, One Road global networks to foster Chinese-controlled supply chains; and sharpen the use of antitrust, intellectual property (IP), and standards tools to advance industrial policies. To develop capabilities prioritized in its plans, China is repositioning to obtain foreign technology through partnerships in open technology and basic research, and to establish research and development (R&D) centers overseas, and talent programs for foreign experts to work in China. Plans for new market openings are limited to zones and focus on areas where China seeks foreign expertise (emerging technologies and education) and capital (financial services). China faces widening and deepening trade tensions, foreign pressures on businesses to move some production out of China, foreign government restrictions on technology transfer to China, global scrutiny of Chinese overseas commercial activity, and international skepticism about China's commitment to market opening and global trade rules. Chinese President Xi Jinping is reviving a dual circulation economic policy that his predecessor used during the 2009 financial crisis and the supply side reforms that Xi used in 2015 to upgrade industry and launch Made in China 2025 (MIC 2025) industrial policies. Dual circulation refers to leveraging the dual forces of domestic and global demand by developing domestic capacity while pursuing openings in global markets. The policy aims to boost both domestic supply and demand in response to what Chinese leaders describe as a complex, unstable, and uncertain global environment. The approach is not a simple turn inward, but rather seeks to transfer and localize foreign capabilities in China and maintain access to global markets wherever possible including for key inputs, technology, and exports to develop China's capabilities. Dual circulation appears to have intensified China's non- reciprocal approach to trade whereby its market has become increasingly restrictive while Chinese firms expand overseas. In 2009, when global industry contracted, China subsidized production in 13 sectors, funding domestic purchases of these products and exporting excess capacity, a precursor to China's One Belt, One Road initiative. Details to date about national, regional, and industry plans emphasize ensuring China's national economic security November 12, 2020 including national economic, industrial, and technology development goals and economic competitiveness and properly handling the relationship between openness and independence. Chinese leaders seek to secure China's supply chains and boost self-sufficiency in agriculture, energy, technology, and industry. In a speech to the Party's Central Economic and Financial Working Group in April 2020, President Xi called for building independent, controllable, secure, and reliable supply chains to ensure industrial and national security with access to at least one alternative source for important products. President Xi said China should use existing global dependencies on China as a counterweight to pressures to shift manufacturing out of China and use the pull of China's market to attract global resources and deepen global dependence on China. Xi also called for developing and leveraging control of core technologies in sectors such as high speed rail, telecommunications and power equipment, and new energy and localizing technology and critical production in China, including through import substitution. One Belt, One Road is often cited as a network to facilitate secure trade and gain initial global footholds in MIC2025 sectors. To counter offshoring pressures, Hainan Province is reviving incentives for manufacturing that processes imported inputs for re-export (e.g., duty free import of raw materials, components, and equipment) and air and shipping logistics. China is also looking to other priorities: Agriculture: The government is drafting a food security plan, making provincial governors responsible for grain security measures, increasing domestic capabilities, and diversifying sources for agricultural imports. China plans to introduce new strains with higher yields (a potential nod to biotech now that China owns Syngenta), and boost production of high quality grains and soy. Diversification is affecting China's shortfalls in meeting purchase targets set by the January 2020 U.S.-China trade agreement. Technology: China is focused on developing the digital economy and cryptocurrency and digital trade rules that it aims to push globally. China's stimulus committed $1.4 trillion over five years for digital infrastructure, including 5G, smart cities, and Internet of Things applications for manufacturing. U.S. business has expressed concerns that (i) these sectors are already restricted, and (ii) procurement in areas such as cloud computing could favor Chinese firms and require technology disclosure and data localization. Finance: China is developing a central bank digital currency to try to influence global finance and ecommerce, and to diversify from U.S. dollar financing. The Chinese city Shenzhen and Hainan Province are to pilot cross-border cryptocurrency trade and cash pooling of foreign exchange and China's currency, the renminbi. The zones are also promoting financial services investment; the securitization