Five-year plans of China


In the People's Republic of China, five-year plans are a series of social and economic development initiatives issued by the Chinese Communist Party since 1953. Since 1949, the CCP has shaped the Chinese economy through the plenums of its Central Committee and national party congresses. The plenums follow a customary pattern of themes; since the 14th Party Congress, the fifth plenum has evaluated the current five-year plan and outlined the next five-year plan.
Planning is a key characteristic of the nominally socialist economies, and one plan established for the entire country normally contains detailed economic development guidelines for all its regions. In order to more accurately reflect China's transition from a Soviet-style command economy to a socialist market economy, the plans since the 11th Five-Year Plan for 2006 to 2010 have been referred to in Chinese as "guidelines" instead of as "plans".

Role

Medium and long-term planning are central to coordinating state activity across many policy areas in China and China's Five-Year Plans are one of the most prominent examples of this approach. Through the Five-Year Plans, the CCP and the government establish their policy priorities. Five-Year Plans continue to be a central means of organizing policy in China, especially in the areas of environmental protection, education, and industrial policy.
Formulation of a new five-year plan generally begins midway through the current plan. The formulation usually takes two to three years and involves series of rounds such as evaluation, preliminary research, drafting and revisions, and soliciting public input. The initial formulation of a Five-Year Plan begins with fairly short, general guidelines prepared by the CCP Central Committee in the fall prior to the start of a Plan period. More detailed plans are drafted by the State Council and approved by the National People's Congress the following March. These plans establish national priorities and outline how they will be met. Administratively, the Plans result in the development of numerous specific action plans across different levels of administration. These programs evolve over the course of the plan period. As academic Sebastian Heilmann observes, this process is best viewed as a planning coordination and evaluation cycle rather than a unified blueprint.
China's Five-Year Plans have been praised for their efficiency, capabilities and their importance to rapid economic growth, development, corporate finance and industrial policies.

First Plan (1953–1957)

Having restored a viable economic base, the leadership under CCP Chairman Mao Zedong, Premier Zhou Enlai, and other revolutionary veterans sought to implement what they termed a socialist transformation of China. The First Five-Year Plan was deeply influenced by Soviet methodologies and assistance from Soviet planners. Industrial development was the primary goal. With Soviet assistance in the form of both funds and experts, China began to develop industries from scratch. Consistent with the focus on developing industry, northeast China was the region which received the greatest share of state funds during the First Plan.
The First Five-Year Plan phrased its developmental focus in the terminology of revolution. It attributed the backwards state of China's economy to contradictions between the developing productive forces and the capitalist relations of production. Agriculture, fishing, and forestry would be collectivized. Regarding commercial and services industries, the approach in the first Five-Year Plan was for the government to buy them out, including through coercing reluctant sellers if necessary.
Government control over industry was increased during this period by applying financial pressures and inducements to convince owners of private, modern firms to sell them to the state or convert them into joint public-private enterprises under state control. The Plan strained agricultural production. In terms of economic growth, the First Five-Year Plan was quite successful, especially in those areas emphasized by the Soviet-style development strategy. During this Plan period, China began developing a heavy-industrial base and brought its industrial production above what it had been prior to war. China also raised its agricultural production to above prewar levels, resulting primarily from gains in efficiency brought about by the reorganization and cooperation achieved through cooperative farming. Although urbanization had not been a specific goal of the plan's focus on industrialization, industrialization also prompted extensive urban growth. By 1956, China had completed its socialist transformation of the domestic economy.

Second Plan (1958–1962)

This plan was created to accomplish several tasks, including:
The Political Bureau of the CCP had determined that gross value of agricultural products should increase 270%; in fact, the gain was a considerably more modest 35%. The country saw increases in capital construction over those observed during the first Five-Year Plan and also saw significant increases in industry and income.
However, the Great Leap Forward, which diverted millions of agricultural workers into industry, and the great sparrow campaign, which led to an infestation of locusts, as well as unprecedented natural and weather based issues, caused a huge decrease in food production. Simultaneously, rural officials, under huge pressure to meet their quotas, vastly overstated how much grain was available. Thus, a massive nationwide famine ensued.
The policies of the Second Plan's Great Leap Forward departed from the approach in the Soviet-inspired First Plan, which stressed central command and extensive planning. Instead, the approach entailed local areas marshalling all available resources for large projects. In 1960–61, attempts were made to redirect twenty million workers into agricultural production and to reallocate investment into those industrial sectors that could further support agriculture. This shift was also in sharp contrast to the rapid industrialization seen in the First Five-Year Plan.

Third Plan (1966–1970)

The Third Plan was originally due early in 1963, but at that time China's economy was too dislocated, as a result of the failure of the Great Leap Forward and four poor harvests to permit any planned operations. No five-year plan ultimately covered the period 1963–1965.
As initially conceived, the Third Five Year Plan emphasized further development in China's already more developed coastal areas and a greater focus on consumer goods. It called for enhancing "eating, clothing, and daily use" items. During discussions of the Third Five Year Plan, Mao acknowledged that during the Great Leap Forward, "We set revenue too high and extended the infrastructure battlefront too long," and that it was "best to do less and well."
The Plan ultimately called for the prioritization of national defense in the light of a possible big war, actively preparing for conflicts and speeding up construction in three key areas; national defense, science and technology, and industry and transport infrastructure. The turn towards a greater emphasis on developing heavy industries and national defense industries was prompted by the Gulf of Tonkin incident, which increased fears among Chinese leadership that the United States would ultimately invade China. Support among leadership for Mao's proposed Third Front construction increased as a result and changed the direction of the Third Five Year Plan.

Fourth Plan (1971–1975)

The Fourth Five Year Plan sought decentralization and prioritized "small scale, indigenous, and labor intensive" development projects over "large scale, foreign, and capital intensive" development.

Fifth Plan (1976–1980)

The central government stipulated the 1976–1985 Ten Year Plan Outline of Developing National Economy in 1975, which included the 5th Five-Year Plan.
In March 1978, the Ten Year Development Outline was amended because the original version in 1975 stipulated that by 1985, steel and petroleum outputs should reach 60 and 250 million tons respectively, and 120 large projects, including 10 steel production bases, nine non-ferrous metal bases, eight coal bases and 10 oil and gas fields, should be built. To achieve these goals, the government would invest 70 billion yuan in infrastructure construction, equaling total national investment over the previous 28 years. These were impossible targets and ran counter to economic development rules.
The Plan put forward suggestions to set up an independent and comparatively complete industrial system and national economic system from 1978 to 1980.
With the implementation of the Plan, considerable success was achieved. In 1977, the gross output value of industry and agriculture reached 505.5 billion yuan, 4.4% above-target and representing an increase of 10.4% compared with the previous year. Gross domestic product for 1978 reached 301 billion yuan, an increase of 12.3% compared with 1977, and an increase of 19.4% compared with 1976.
However, during this period, the Chinese economy developed too quickly, and the very high goals triggered the onset of yet another round of mistakes. In December 1978, the 3rd Plenary Session of the 11th Central Committee of the Chinese Communist Party shifted the work focus of the CCP to modernization. The Session emphasized that the development should follow economic rules and proposed readjustment and reform measures, which indicated that national economic development had entered a new phase, one of exploration and development. In April 1979, the central government formally put forward new principles of readjustment, reform, rectification and improvement.