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1 [1] (January 5, 2021)

handle is hein.crs/govecbj0001 and id is 1 raw text is: Updated January 5, 2021 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 5th Plenumin late October 2020to deliberate on China's 14th Five-Year Plan (FYP) for 2021-2025 and economic goals out to 2035. China's annual Central Economic Work Conference reviewed the plans in December ahead of the scheduled ratification offmal versions at the annual session of China's legislature in March 2021. Initial details suggestthat 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 Roadglobal networks to foster Chinese-controlled supply chains; and sharpen the use of antitrust, intellectualproperty (IP), and standards tools to advance industrial policies. To develop strategic technologies prioritized in its plans, China is prioritizing efforts to obtain foreign technology through global pathways that are not yet restricted, such as partnerships in open technology and basic research, theestablishmentof research and development (R&D) centers overseas, and talent programs for foreign experts to workin China. Plans for new market openings are limited to trade zones and areas where China seeks foreign expertise (emerging technologies andeducation) and capital (financialservices). Dual Circulation and Secure Supply Chains China faces widening and deepening tradetensions, foreign pressures onbusinesses to move some production out of China, foreign government restrictions on technology transfer to China, and global scrutiny of Chinese overseas commercial activity. There is also bro ad international skepticis mabout China's commitment to market opening and global trade rules andnorms. Chinese President Xi Jinping is reviving a dualcirculation economic policy that his predecessor used during the 2009 financial crisis and the supply sidereforms thatXiintroduced in 2015 to upgrade industry and launchMade in China 2025 (MIC 2025) industrial policies . Dual circulation refers to leveraging thedual forces of domestic and global demand by developing domestic capacity while pursuing openings in globalmarkets. The policy aims to boost both domestic supply and demand in response to what Chinese leaders describe as a complex, unstable, anduncertain 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 China's national economic security-including national economic, industrial, and technology development goals and economic competitiveness-and properly handling therelationship between openness and independence. China's leaders seek to secure supply chains andboost self-sufficiency in agriculture, energy, technology, and industry. In a speech to the Party's Central Economic and Financial Working Group in April2020, President Xi called for building independent, controllable, secure, andreliable 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 topressures to shift manufacturing outof China and use the pull of China's market to attract global res ources and deepen global dependence on China. Xi also called for developing and leveraging controlof core technologies-in sectors such as high speed rail, telecommunications and power equipment, and new energy-and localizing technology and criticalproduction 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 inMIC2025 sectors. To counter offshoring pressures, for example, Hainan Province is reviving trade zone incentives for manufacturing that processes imported inputs for re-export (e.g., duty free import ofraw materials, components, and equipment) and air and shipping logistics. China is also looking to other priorities, including: 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 is focusing on seed technology andplans 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 arguably is affecting China's shortfalls in meeting purchase targets set by the January 2020 U.S.-China trade agreement. Technology. China is developing strategic technologies and digitalinfrastructure (including a cryptocurrency), and airs to advance its digitalinfrastructure and domestic rules globally. China's stimulus committed $1.4 trillion over five years for digitalinfrastructure, including5G, smart cities, and Internet of Things applications for manufacturing. U.S. bus inesshas expressed concerns that (i) these sectors are already restricted, and (ii) procurement in areas such as cloud computing could favor Chinesefirms and require technology disclosure and data localization. Finance. China is developing a centralbank digital currency to try to influence global finance and e-commerce, and to diversify fromU.S. dollar financing. The city of