Article

PrintPrint EmailEmail ShareShare CiteCite
Style:MLAAPAChicagoClose

loading...

China's Bold New Plan for Economic Domination

Authors: David S. Abraham, International Affairs Fellow in Japan, Sponsored by Hitachi, Ltd. 2010-2011, and Meredith Ludlow, Pacific Epoch; U.S. Department of Commerce, Shanghai
May 18, 2011
TheAtlantic.com

Share

Over the past few months, Beijing has released several plans laying out its vision for the country's economic future. China's twelfth Five-Year Plan, approved in March, and a follow-up plan released late last month by the National Development and Reform Commission, reveal a national strategy with several worrying developments for multinational corporations.

The economic blueprints focus on seven "Strategic Emerging Industries" that Beijing aims to dominate on a global level: alternative energy, biotechnology, new-generation information technology, high-end equipment manufacturing, advanced materials, alternative-fuel cars, and new energy technologies. Global firms that compete in everything from hydropower to flat panel display technology will have to account for stronger Chinese competition. And for countries, such as Japan and Korea, with hopes of having their domestic firms lead these industries, these new Chinese plans may necessitate revamping their policies of state assistance for corporations.

To support its strategic industries, Beijing is set to provide accommodating fiscal, tax, and financial policies as well as to "reasonably guide mergers and acquisitions to increase manufacturing industry concentration," according to the published plans. This includes roughly $1.5 trillion in government spending (almost 5 percent of GDP) annually, the goal of which is to grow the strategic industries' contribution to China's growth from less than 5 percent today to 15 percent by 2020. In other words, China plans to triple the role that these high tech industries play in its economy. By 2020, Standard Chartered estimates that China's economy will reach $25 trillion. At these levels, China intends that $3.75 trillion, or roughly the equivalent of Germany's annual GDP, will come from its seven strategic industries.

View full text of article.

More on This Topic

Op-Ed

China's End of Exuberance

Author: A. Michael Spence
Project Syndicate

Michael Spence writes that slowing growth puts Chinese authorities in the tricky position of shifting their economy from a growth model based...