China’s 5th plenary session
This article was originally published on Finsbury.com
An opportunity to upgrade corporate and public affairs strategies for 2025 and 2035
Background & Context
The 5th plenary session of 19th Central Committee of the Communist Party of China (CPC) and two outcomes – namely, the proposals of the 14th Five-Year Plan (FYP) and the 2035 Vision – are particularly significant this year. It is not only because the top political assembly set out the direction for China’s economic and social development in the next 5 or even 15 years, but also because China has been tackling several challenges including the coronavirus pandemic, economic recovery and international geopolitical turmoil, which have ripple effects on the global political economy.
Important Period of Strategic Opportunities – – the CPC leadership made the judgment that China is still in an Important Period of Strategic Opportunities despite the common view that China is facing complex challenges and difficulties internally and internationally.
2035 Vision – a special outcome from the 5th plenum is a 2035 Vision, in addition to the 14th FYP. The goals are essentially a landmark and milestone in China’s “great renaissance” march, aiming at building China into a modernised socialist nation in the next 15 years.
High-Quality Growth – – the underlying theme for 14th FYP and 2035 Vision. The solution given by the 5th plenum to lift the economy out of the “middle income trap” is to transform the economy to a high-quality growth underpinned by the dual circulation strategy and self-reliance and self-strengthening in science and technology (S&T).
Dual Circulation Strategy – the planned new economic development landscape. The dual circulation strategy was proposed by Xi as the overarching economic development strategy in response to domestic challenges and international headwinds, aiming to make Chinese economy mainly rely on domestic consumption (internal circulation) and supported by cross-border trade and investment (external circulation). As was clarified repeatedly, only with a continual and deeper opening-up policy can the dual circulation and a high-quality economic growth be turned into reality.
S&T Self-Reliance and Self-Strengthening – the strategic support for national development. In the 14th FYP and the 2035 Vision, CPC laid out the goals for China to be a strong nation in economy, technology, manufacturing, culture, education, talent, etc. Such aspirations for China to turn from big to strong will be mainly spurred by China’s S&T self-reliance and self-strengthening policies. It is the first time for technology and innovation to be placed as the central focus for a FYP.
New Type of Whole-of-Nation System – the unique governance system to achieve major technological breakthroughs. The 5th plenum acknowledged China’s governance system as what is needed to build a modernised socialist nation. To achieve the expected technological self-sufficiency, a CPC-led new type of whole-of-nation system is to be implemented to break the stranglehold in key core technologies. It is expected that a batch of defined strategic emerging industry sectors with supporting taxation, subsidies and procurement policies will be rolled out soon.
Key areas to watch
The high-quality growth model is supposed to ensure sustainability embedded into China’s economy, environmentally and socially. The six areas below are deemed to be key beneficiaries, amongst others, as China will try to strike a better balance to address issues of disparity.
China’s technological self-sufficiency strategy addresses the stranglehold of U.S. sanctions on China’s advanced core technologies. This strategy aims to achieve major breakthroughs in key emerging industries, such as semiconductors, quantum technology, navigation, remote sensing and hydrogen power. China will invest heavily in fundamental science research to achieve, in the words of President Xi, a “breakthrough from 0 to 1”.
Following Xi’s commitment made at the UN General Assembly in September (ie. that China’s carbon emissions to peak in 2030 and achieve net zero in 2060), China’s Ministry of Ecology and Environment (MEE) will deploy actions to reach the carbon emissions peak in the next 10 years. The MEE plan follows a whole nation, whole government and whole society approach. Public-private partnerships are expected to play a larger role in this process.
Capital markets reform
Financial markets will be indispensable as China’s real economy transforms to reach high-quality growth. In the context of China’s overarching macro-prudential regulation framework, the 14th FYP proposal highlighted capital markets reform, especially the registration-based IPO system and the normalized delisting mechanism. These are measures aim to strengthen the direct financing support for micro, small and medium enterprises (MSMEs).
The COVID-19 pandemic exposed loopholes in China’s public health system and raised public health awareness. There is a proposal to build a national public health protection network, which can strengthen the public health emergency alert and response system and enhance its overall ability to handle unexpected public health issues.
China’s urbanisation has changed the nation’s landscape and led to many urgent issues, including an imbalance in regional economic growth and an aging population. In the 14th FYP, the government will need to boost healthcare services, elderly care and pension funds, as well as education and culture sectors.
Rural area revitalisation
The 5th plenum called for the all-around implementation of the rural area revitalisation strategy, which will help balance the economy, support the rural areas and prioritise the agricultural sectors in economic policy making. Smart farming and intelligent agriculture technologies will also be key investment areas.
Communications best practices during China’s 14th FYP
All sectors should ensure their corporate narratives resonate with China’s sustainability mission. Firms with sustainability and purpose well-integrated into their brand and communications strategy will have a more natural alignment of their corporate reputation with China’s long-term goals.
China’s goal to peak carbon emissions by 2030 and achieve carbon neutrality by 2060 are causes that all corporate citizens can rally around. During the 14th FYP, companies and organisations across all sectors – not just those in the energy or transportation industries – should have narratives about sustainability and climate change at the ready.
Technology companies must prioritise building trust locally, by engaging in long-term advocacy and preparing a policy communications strategy. Technology is an increasingly critical touch-point for geo-political advantage and posturing and anticipated technological decoupling or parallel technological systems is becoming a reality. While some Chinese companies have even engaged U.S. law and K-Street firms for lobbying, geopolitical tensions create challenges for all international and Chinese firms looking to work cross-border.
A communications strategy that includes long-term advocacy and policy approaches can help a brand build trust and credibility.
Biotech and healthcare companies must see beyond regulatory affairs. The coronavirus pandemic has put medical science at the top of the agenda. The discussions are increasingly tenuous and political as a potential vaccine comes to market and the world plans for the next steps to fight the pandemic.
In this current environment, biotech and healthcare companies have an opportunity to be proactive and leverage their expertise to cut through the noise. They have the know-how to be myth busters and garner the public’s trust. This is a critical time to design and implement credible, science-based and innovation-focused communications strategies. Ultimately, biotech and healthcare companies need to see communications as an integral part of public affairs and take geopolitical dynamics into account at every stage.
Financial services firms need communications strategies that are flexible, highlight their unique expertise and provide policy guidance for various real economy sectors. Financial services companies have an opportunity to support China financial regulators’ efforts to stabilise, revitalise and upgrade the nation’s real economy by leveraging their unique areas of expertise.
Communications strategies should be tailor-made and could highlight various aspects of a firm’s contributions ranging from, financial support to boost technological innovation and facilitating cross-border trade and transactions, to managing high net worth individuals’ (HNWIs) wealth and elderly people’s pension or reducing carbon footprint.
MNCs should seize the opportunities arising from China’s ambitions to facilitate global economic governance reform. China has increasing confidence and willingness to join the global economic governance reform: for instance, the 14th FYP proposed building a higher-quality Belt and Road Initiative (BRI) that meets international standards and aligns with debt sustainability principles; and China signed the Regional Comprehensive Economic Partnership (RCEP) as the latest evidence of China’s aspirations in this front.
It is an ongoing task for multinational corporations to study what narratives and propositions they need to deliver in order to serve their best interests while developing relevant business response plans.
MNCs should review and reflect on the role that China has played and will continue to play in their business and global reputation over the next 5-to-10 years. This is a chance to upgrade stakeholder engagement and communications strategies. Post-COVID China will force MNCs to answer tough questions if they want to gain market share. In this context, MNCs have a critical opportunity to reposition their reputation strategy in China, especially considering the present complex business and communications environment. This is ultimately an important period of strategic opportunities and the 5th plenum has provided new opportunities that MNCs can leverage.