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By Su Hsing Loh
The People's Republic of China's twelfth five-year plan, which provides the overarching guidelines for its domestic policies from 2011- 2015, was officially adopted on March 14 of this year.
Notably, the average rate of gross domestic product (GDP) growth has been lowered from eight percent to seven percent, signifying that economic development will not be pursued at the expense of other priorities. The plan suggests China's attempt at a long-overdue transition from an overly export-dependent economic development model mainly based on low-cost manufacturing, to one driven by domestic consumption and services.
Widely regarded as the most 'green' five-year plan to date, significant targets for reducing the environmental costs of development are also outlined, with energy consumption per unit of GDP to be reduced by sixteen percent, and carbon dioxide emission per unit of GDP to be cut by seventeen percent, while non-fossil fuel will account for 11.4 percent of primary energy consumption. Seven 'Strategic Emerging Industries' have been identified: these are biotechnology, new energy, high-end equipment manufacturing, energy conservation and environmental protection, clean-energy vehicles, new materials and next-generation information technologies. The development of these industries will be encouraged through tax breaks and beneficial procurement policies, with the intention of increasing their contribution of GDP to eight percent by 2015. China has indicated the intention for reform in monopoly industries for easier market entry and greater competition. This is an interesting development in view of the controversy surrounding Baidu, which faces accusations of engaging in unfair practices by making use of its dominant share of the Internet search market in China. In the context of these objectives, what are some of the areas which might hold economic opportunities for Britain and strengthen its relationship with China?
The largest investor in China among
Based on the five-year plan, there are several areas of possible interest for Britain. Firstly, Britain might benefit from the planned growth in China's clean energy and green technology markets. China's investment in environmental protection is expected to increase to around 460 billion dollars over the five-year period. A significant part of this will be channelled toward pollution control, with the target to cut the release of major pollutants by eight to ten percent. China's focus on green technology coincides with Britain's efforts to boost its renewable energy industry. The British budget for 2011 features several initiatives to this end, including the initial capitalisation of the
Secondly, Britain could further explore research and development projects with China. China is aiming to reach two million annual patent filings by 2015 and has introduced an array of incentives, including cash bonuses and tax breaks for companies that are patent producers. Currently, China publishes more joint scientific research papers with Britain than any other EU country. With the five-year plan allocating 2.2 percent of GDP to research and development, Britain could establish stronger research links with China. At present, Britain and China have undertaken research in various fields, including climate change, infectious diseases, biomedicine and traditional Chinese medicine, nanotechnology and materials science. The commercialisation of the results of these collaborative research efforts would yield benefits for both countries.
Thirdly, Britain might make inroads into the services sector. Under the five-year plan, China is aiming to increase the service sector's value-added output to account for 47 percent of GDP. China's leaders are aware that the development and expansion of the service sector, especially in the fields of banking and telecommunications, lags behind the demand generated by China's fast economic growth. Despite China's accession to the
There are compelling incentives for Britain to invest in China's economic growth and attain mutually beneficial outcomes. In addition, strengthened economic ties might have positive spillover effects on other domains of the bilateral relationship that are more difficult to navigate due to ideological differences, as economic interdependence confers the advantage of convergence in strategic interests. In this context, the opportunities for greater economic engagement offered in the five-year plan ought not to be overlooked.
(Su Hsing Loh is an Associate Fellow with the Asia Programme at Chatham House.)
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