China Focus: China's five-year plan attracts global attention

We may be half a year from its release but a government plan that will set the course for China's economic and social development in the coming five years was a hot topic at the Summer Davos forum this week.

The five-year plan, China's 13th, is considered strategically important as it is crucial to China's goal of realizing "a moderately prosperous society in all respects by the centennial anniversary of the founding of the CPC in 2021."

China is also aiming to double its 2010 GDP and people's income by 2020. The quality of the next five-year-plan will, to a large extent, decide whether these grand goals are achievable.

Drafting of the plan started in April last year. It will be discussed during a key policy meeting in October and made effective during the annual session of China's top legislature in March.

REFORMS AND INNOVATION

Experts and entrepreneurs attending the Summer Davos forum in northeast China's Dalian between Wednesday and Friday believe reforms and innovation will be the focus of the plan.

China has no alternative but to rely on deepened structural reforms and more creativity to counter a housing slowdown, diminishing demographic dividend and uneven global recovery, they agreed.

"China must try hard to spur vitality, which, unlike headline GDP growth, is not quantifiable," said David Wu, senior partner of PwC China.

As a rule, a GDP growth target is included in the development plan. The 12th five-year-plan set an average annual growth target of around 7 percent. Market estimates put the growth target in the 13th five-year-plan between 6.5 and 7 percent.

Wu expects more reforms in the financial system, which he sees as an important form of infrastructure. "A viable financial system that can channel money to where it is needed, such as small and medium-enterprises (SMEs) should be in place."

Arancha Gonzalez, executive director of the International Trade Center, a joint agency of the World Trade Organization and the United Nations, said China must be patient and stay focused as it tries to encourage innovation and entrepreneurship.

The whole world faces the "SMEs problem," noted Gonzalez. Risk-averse banks ignorant of the virtues of SMEs are reluctant to lend while SMEs are often not well-informed on how to access funding.

Just as it takes time for China to switch from an investment-led growth model to one led by consumption, accumulating the necessary experience and skills in nurturing SMEs will be a long-term process, she said.

"There is no 'magic button' to solve the problem. The government must act with a clear sense of direction and determination to manage 'a board of multiple buttons' to empower SMEs for inclusive growth," Gonzalez added.

BUSINESS OPPORTUNITIES

While the world awaits the answers to how China will try to write another chapter in its growth story, entrepreneurs are excited by the opportunities that are likely to follow the introduction of the next five-year-plan.

Tata Consultancy Services (TCS), the world's fourth largest IT company and a subsidiary of Indian conglomerate Tata Group, told Xinhua that it expects to see its business in China go from strength to strength with China's emphasis on consumption and innovation.

Since TCS came to China in 2002, its global revenue has increased from less than 1 billion U.S. dollars to 15 billion U.S. dollars, with an annual growth rate of around 15 percent.

"The Internet itself has become a mainstream business," said Girish Ramachandran, President of TCS (Asia Pacific), citing people's increasingly digitized lives.

China has 500 million smartphone users and vibrant e-commerce.

"TCS is optimistic about the future of China and will continue to invest in China," Ramachandran said.

If the government can deliver its promise of doubling residents' income, it will undoubtedly be a boon for global economies. As the Chinese become affluent, their itchy feet have taken them all over the world. And wherever they go, they shop.

Last year, more than 100 million people traveled abroad and the number of visitors rose 10 percent in the first six months of this year. As the world's biggest spender, Chinese tourists spent more than 1 trillion yuan during their foreign travels in 2014.

Airbnb, the fast-growing housing rental service, aims to make deeper inroads into China, a market the company values for its growth potential, Nathan Blecharczyk, its co-founder and CTO, told Xinhua. Airbnb plans to set up an office in Beijing soon.

Last year, the number of Chinese travelers using Airbnb grew 700 percent, faster than any other country. Endi