The 12th Five-Year Plan: Overview and Policy Recommendations
- Critical among the objectives of the 12th Five-Year Plan is changing the growth pattern toward a more services and consumption driven model, away from the past emphasis on industrial production, capital investment, and exports, which is necessary to address the People's Republic of China's (PRC) social, environmental and external imbalances.
- While the key objectives suggest a continuation of the previous plan's policies to rebalance the economy, new features include innovation-driven industrial policy and more determined steps toward a low-carbon economy.
- Rebalancing is unlikely to occur in the absence of bolder policy adjustments. Some of the key policy areas requiring attention include shifting the emphasis of public spending from investment to public services, further financial sector liberalization, greater private sector participation in the economy, and fiscal reform to reduce income inequality and strengthen local government finances.