BEIJING: Five years ago, China's top leaders laid out an ambitious "road map" for the country's economy, predicting annual average growth of 7.0 per cent until 2005 and hefty increases in coal production and power capacity.
When China's top leaders sat down at a party plenum in Beijing on October 08 to review the next five-year plan, the 11th since the Communist party took power in 1949, they did not need to be reminded their predictions were out by a large margin.
Growth has averaged 8.7 per cent since 2000, and is now running at more than 9.0 per cent; coal output is almost double what the planning ministry predicted and power capacity about 20 per cent higher. Once a reliable indicator of future trends, the quinquennial compilation of the country's five-year plan has become an increasingly outdated guide to China's ever more complex mixed economy.
"It's part of the residue from the old system ... but the plan has not been a big driver in the economy in the past five years," says Nicholas Lardy, of the Institute for International Economics in Washington.
But the plan remains important. Despite its Soviet-style title, the document the party will produce is a statement of the leadership's priorities for the economy.
"Don't look at the predictions. Look at the policy content," says a Beijing-based economist.
With that in mind, the document will take on a decidedly political hue, as it will mark the continuing consolidation of power by Hu Jintao, who became China's president in 2003.
The draft document to be reviewed by the plenum is expected to consecrate Mr Hu's economic policies, which have been percolating through the propaganda missives dispatched out of Beijing for the past two years.
The policies focus on maintaining high-speed economic growth, of at least 7.0-8.0 per cent, to ensure the economy creates sufficient new jobs to absorb the 10m-15m workers entering the labour market each year. At the same time, Mr Hu and Wen Jiabao, the premier, have placed a new emphasis on tempering the impact of this growth on the tens of millions of Chinese, especially in the countryside, who have not enjoyed its benefits.
Mr Hu has encapsulated this in his "five balances" policy, a call to strike an equilibrium between the "domestic and international, the inland and the coast, the rural and urban, society and the economy, and nature and man". In each of the "balances", say Chinese officials, the central and local governments should favour the first consideration over the second one.
The plan is also expected to enshrine the notion of "green GDP" in policymaking, a fashionable tag for the need to ensure that growth does not continue to come at the expense of environmental destruction.
The numbers that predict economic growth and production in various sectors for the next five years should still be in the plan, but are more scenario planning than anything else, say economists.
The National Development and Reform Commission (NDRC), effectively the former planning authority and the most important economic policymaking body along with the central bank, remains powerful nonetheless. The NDRC is at the peak of a bureaucratic system that requires a consensus to be forged on important policies, and is the key gatekeeper for interest groups jostling to have their concerns acknowledged in the document.
"You have a lot of dislocations all over the country and you need a sober hand to oversee that, and that is the NDRC," said Bert Keidel, a former economist at the World Bank in China with the Carnegie Endowment for Peace in Washington.
The NDRC itself has come under great criticism because of the 10th plan's underestimation of power demand, which has left key industrial centres short of electricity for three years.
But Mr Keidel says there has always been some underestimation of targets for political reasons.
In setting the parameters for infrastructure development, such as the construction of ports and highways, the NDRC has laid the groundwork for China's private-sector boom as well, the very thing that has rendered the traditional notion of plans meaningless.
The plenum will be closely watched for signs of personnel changes, to see which of Mr Hu's protégés are being positioned as future leaders.
Under syndication arrangement with FE