Five-Year Plan of China

Five-Year Plans of China

The Five-Year Plans of China were a series of economic development initiatives. The economy was shaped primarily by the Chinese Communist Party through the plenary sessions of the Central Committee and national congresses. The party plays a leading role in establishing the foundations and principles of communism, mapping strategies for economic development, setting growth targets, and launching reforms.

Planning is a key characteristic of centralized, communist economies, and one plan established for the entire country normally contains detailed economic development guidelines for all its regions. As China has transited from Soviet-style planned economy to market economy, the name for the 11th five-year program was changed to "guideline" instead of "plan". This was drafted under the direction of the Central Committee of the Communist Party of China (CPC) presided over by late Premier Zhou Enlai and Chen Yun.

The key tasks highlighted in the Plan were: to concentrate efforts on the construction of 694 large and medium-sized industrial projects, including 156 with the aid of the Soviet Union, so as to lay that the primary foundations for China’s socialist industrialization; to develop agricultural producers’ cooperatives to help in the socialist transformation of the agriculture and handicraft industries; to put capitalist industry and commerce on the track of state capitalism so as to facilitate the socialist transformation of private industry and commerce.

These tasks were successfully carried out during this time.

The combined output of the state-run, cooperative and joint state-private ownership economies boosted national income from 21.3 percent in 1952 to 92.9 percent in 1957.

Accumulated investment in capital construction was 55 billion yuan and fixed asset increments reached 46.05 billion yuan, 1.9 times higher than at the end of 1952. About 595 large and medium-sized projects were completed and put into production, laying the framework of China’s industrialization. The gross value of industrial products in 1957 increased 128.6 percent from 1952.

The overall steel production during the period reached 16.56 million tons, 2.18 times the combined production from 1900 to 1948, which was 7.6 million tones. Coal production in 1957 reached 131 million tons, increasing 98 percent from 1952.

Gross output value from industry and agriculture rose from 30 percent in 1949 to 56.5 percent in 1957, while that of heavy industry increased from 26.4 percent to 48.4 percent. In 1957, grain production reached 195 billion kilograms and cotton output 32.8 million dan (1 dan = 50 kilograms), both surpassing the targets set in the Plan.

The major problems that arose during this period were: agricultural production couldn’t keep pace with industrial production. The Plan regarded gross industrial output value accounting for 70 percent of the gross output value of industry and agriculture and means of production accounting for 60 percent of the gross industrial output value as indicators of industrial modernization, which ignored the development of agricultures in some sense.

Investments in capital construction in 1956 totaled 14.735 billion yuan, increasing 70 percent over the previous year. Fiscal expenditure in the form of infrastructure loans rose to 48 percent from 30.2 percent from 1955, putting a strain on the national budget.

Socialist transformation was pushed forward too quickly, which left long-lasting after-effects.

Third Five-Year Plan, 1966-1970

Research and study into the elements of this Plan started in early 1964. The Plan contained two comparatively detailed schemes: one was the Preliminary Tentative Plan of the 3rd Five-year Plan (1966-1970) proposed by the State Planning Commission and agreed by the Central Government Work Meeting in May 1964; the other was the Report Syllabus about the Arrangement of the 3rd Five-year Plan drawn out by the State Planning Commission and agreed by the central government in September 1965.

The Tentative Plan set out the following basic tasks:

1) To spare no efforts to develop agriculture, solve problems concerning people's food, clothing and other basic needs;

2) To strengthen national defense, and endeavor to make breakthroughs in technology;

3) In order to support agriculture and strengthen national defense, to enhance infrastructure, continue to improve production quality, increase production variety and quantity, to build an economy of self-reliance, and to develop transportation, commerce, culture, education and scientific research.

The Plan also 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.

According to the Report Syllabus, all major economic indicators were fulfilled in accordance with the plan. The gross output value of industry and agriculture actually exceeded targets by 14.1 percent; the gross output value of agriculture was 2.2 percent over-target; and the gross output value of industry was 21.1 percent over-target.

The outputs of other newly added major products were: 68.06 million tons of coal; 8.604 million kilowatts of electricity; 27.77 million tons of petroleum; 6.527 million tons of steels; 35.901 million tons of iron ore; 2.444 million tons of synthesized ammonia; 2.0416 million tons of fertilizers; 15.33 million tons of cement; 187,000 tons of plastics; 3.22 million tons of cotton spindles; 12,300 tons of chemical fibers; 3,894 kilometers of newly constructed railways and 31,223 kilometers of newly constructed highways were put into operation; and handling capacity of the coastal harbors were over 11.91 million tons.

However, as with the earlier two Plans, the blind pursuit of rapid development and accumulation actually created a barrier for future development of the national economy.

Fourth Five-Year Plan, 1971-1975

A first draft of the Plan was developed and agreed upon in September 1970 at the 2nd Plenary Session of the 9th Communist Party Central Committee.

The Draft stipulated as follows:

To ensure that average annual growth rate of gross output value of industry and agriculture reaches 12.5 percent; 130 billion yuan would be budgeted for infrastructure construction within five years; grain output should reach between 300 and 325 billion kilograms, cotton output between 65 and 70 million piculs (1 picul = 60 kg), steel output between 35 and 40 million tons, coal between 400 and 430 million tons, electricity between 200 and 220 billion kWh, and railway freight between 900 million and 1 billion tons.

In July 1973, the State Planning Commission amended the Draft, lowering some of the targets initially set. Steel output was reduced to between 32 to 35 million tons, and later further reduced to 30 million tons. The national economy took a favorable turn in 1972 and 1973. By 1973, all major economic indices had been fulfilled or exceeded, making it the year with the fastest economic growth.

Fifth Five-Year Plan, 1976-1980

The central government stipulated the 1976-1985 Ten Year Plan Outline of Developing National Economy (Draft) in 1975, which included the 5th Five-Year Plan (the Plan).

In March 1978, the Ten Year Development Outline was amended because the original version 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 percent above-target and representing an increase of 10.4 percent compared with the previous year. Gross domestic product for 1978 reached 301 billion yuan, an increase of 12.3 percent compared with 1977, and an increase of 19.4 percent compared with 1976.

However, during this period, China developed its economy too quickly, and the very high goals set spelt the onset of yet another round of mistakes.

In December 1978, the 3rd Plenary Session of the 11th Communist Party Central Committee shifted the work focus of the Communist Party 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.

Sixth Five-Year Plan, 1981-1985

This Plan took some time to draft. It was first planned as part of the “Ten Year National Economic Development Plan Outline for 1976-1985.” In February 1980, the State Council decided to redraft the country’s mid- and long-term plans. It convened a seminar to discuss the compilation of the 6th Five-Year Plan. To that end, the State Planning Commission and related departments also carried out extensive research and calculation work on the compilation of the Plan, and organized related experts to conduct scientific appraisals. The 1982 national planning meeting was again mainly focused on the drafting of the Plan. It was only in December that year that the fifth meeting of the Fifth National People’s Congress officially ratified the Plan.

It was a more comprehensive plan compared to its predecessors since it adjusted and set national economic development onto a more stable and healthy track.

General objectives of the Plan were as follows: to keep pursuing the principle of “adjust, reform, rectify and improve”; to further overcome the various challenges to economic development, and to achieve a decisive turn in the fiscal situation and lay a solid foundation for the advancement of national economic and social development under the next planning period.

Specific objectives included:

1) To achieve an average annual growth rate of five percent for industrial and agricultural products.

2) To keep the supply and quality of consumer products in line with the growth of social purchasing power and changes in consumption structure, and to keep market prices stable.

3) To vigorously cut down material consumption, particularly that of energy, and keep production in line with the availability of resources.

4) To encourage and implement enterprise technological updating, with energy saving as a priority, and to gather the capital necessary to strengthen the construction of key projects energy and communications in preparation for the 7th Five-Year Plan.

5) To assemble the country’s scientific and technological for scientific and technological research and to promote the application of new technologies, and to strenuously develop education, science and culture to accelerate the construction of an ideological and material civilization.

6) To strengthen the construction of the national defense industry, and enhance national defensive forces.

7) To strengthen production and improve economic efficiency to increase the government’s revenue, to gradually increase expenditure on economic and cultural construction and to secure a balance between fiscal revenue and expenditure and credit.

8) To strenuously develop trade, make effective use of foreign capital and actively introduce advanced technology to meet domestic needs.

9) To strictly control the growth of population, make proper employment arrangement for labor forces in the cities and towns, and continuously improve the material and cultural life of people both in cities and the rural areas based on the growth of production and productive efficiency.

10) To strengthen environmental protection efforts.

The Plan achieved great achievements. First, the overall national economy kept a stable growth. The average annual growth rate for industrial and agricultural product was 11 percent. The gross national product in 1985 reached 778 billion yuan, signifying an average annual growth of 10 percent, after inflation, since 1980.

Second, production volume of key products rose dramatically. Compared with those of 1980, 1985 saw a growth of 26.1 percent for steel, 37.1 percent for coal, 35.8 percent for electricity, 17.9 percent for crude oil, 92.8 percent for cotton and an annual growth of 21.4 percent for grain.

Third, progress was achieved in infrastructure construction and technological updating. Total investment in fixed assets for publicly owned enterprises owned reached 530 billion yuan. 496 middle and large projects were constructed and started, and another 200,000 projects were transformed and updated.

Fourth, the fiscal situation improved gradually year by year. Fiscal revenue grew by an average of 15.9 billion yuan every year, which represented an annual growth of 12 percent, thereby realizing a balance between fiscal revenue and expenditure.

Fifth, foreign trade and technological exchange entered a new phase. On the world export volume ranking, China rose from No.28 in 1980 to No.10 in 1984.

Less promising achievements included a disproportionately high fixed asset ratio. Further, consumption volumes grew too fast, and there was a fiscal over-supply. These factors were to have a negative impact on the country's stable growth.

Seventh Five-Year Plan, 1986-1990

In March 1986, the State Council submitted “The 7th Five Year Plan for National Economic and Social Development of the People’s Republic of China, 1986-1990” to the Fourth Session of the Sixth National People’s Congress for review and ratification. It was the first time in China’s history that an all-round plan for social and economic development was created at the start of a new five-year plan.

The fundamental principles and guidelines of the 7th Five Year Plan were as follows:

1) To put reform at the top of the agenda and coordinate economic development with reform.

2) To maintain a basic balance between overall social demand and supply, between the national budget, credit and materials.

3) To improve economic efficiency, especially that of product quality; to properly handle the relations between efficiency and growth rate, and quality and quantity.

4) To adapt to the changing structure of social demand and the demands of economic modernization, and to further adjust the industrial structure.

5) To regulate fixed asset investments, readjust the investment structure, and speed up the construction of the energy, communications, telecommunications and raw materials industries.

6) To shift the construction focus to the technical updating, reforming and extending of existing enterprises.

7) To further the development of science and education.

8) To further open up to the outside world, combining domestic economic growth with expanding external economic and technologic exchanges.

9) To further improve the material and cultural life of all Chinese.

10) To strenuously boost the construction of a socialist ideological civilization along with the construction of a material civilization.

11) To carry on in the spirit of arduous struggle, hard work and thrift.

Specific goals of economic development set out in the Plan were:

To increase gross national industrial and agricultural output by 38 percent within five years, or by an average annual rate of 6.7 percent, gross agricultural output by 4 percent a year, and gross industrial output by 7.5 percent.

To increase gross national output by 44 percent within five years, or by an average annual rate of 7.5 percent.

Production goals for major industrial and agricultural products by 1990 were: between 425 and 450 million tons for grain, 4.25 million tons for cotton, 550 billion kWh for electricity, 1 billion tons for raw coal, 150 million tons for crude oil, and between 55 and 58 million tons for steel. Freight volume was set at 9.4 billion tons.

Investment in fixed assets was set at 1,296 billion yuan, with fixed assets projected to grow by 600 billion yuan.

To increase total import and export volumes by 35 percent within the five years, while expanding the scale of foreign investment and advanced technology. Further, goals were set to increase the actual consumption of both urban and rural residents by 5 percent a year, and at the same time keeping the basic balance between the national budget, credit, material and foreign exchange.

In the field of education, to gradually popularize and implement the nine-year compulsory education scheme, and train five million professionals, twice that during the previous planning period.

Eighth Five-Year Plan, 1991-1995

In March 1991, the Fourth session of the Seventh National People’s Congress (NPC) approved the State Council’s Report entitled "The Ten-year Layout for National Economy and Social Development and 8th Five-Year Plan". Under Deng Xiaoping's leadership, this Plan marked the start of a new phase in China's development.

The national economy maintained its growth momentum during this time. Gross national product in 1995 reached 5.76 trillion yuan, 4.3 times than that in 1980.

Outputs of coal, cement, TV, foodstuff, cotton and cotton dresses were the highest in the world, with steel and chemical fiber outputs second, and electricity supply third.

China’s economy experienced an annual growth of 11 percent, 4 percentage points higher than that during the 7th Five-Year planning period.

Total investment in fixed assets during this time hit 3.89 trillion yuan, with an annual growth rate of 17.9 percent, 13.6 percentage points higher than the previous planning period. Of these, state-owned units’ investments saw an annual growth of 22.9 percent, much higher than the average growth of 4.1 percent previously.

845 large and medium-sized infrastructure projects were completed and put into production, as were 374 technical innovation projects. In terms of transportation infrastructure, 5,800 kilometers of trunk railway, 3,400 kilometers of double-track lines, and 2,600 kilometers of electrified railway were built. Road lengths were increased by 105,000 kilometers, including 1,600 kilometers of highway.

The throughput of ports increased by 138 million tons and 12 new airports were built. 100,000 kilometers of long-distance trunk cable were finished, and the number of telephone switchboards increased to 58.95 million sets. Total installed generation capacity was increased to 75 million kilowatts, and annual electricity supply grew by 9 percent.

Output value of the primary industry increased at an annual growth rate of 4.1 percent, the secondary industry at a rate of 17.3 percent, and the tertiary industry at a rate of 9.5 percent. Output composition of the three sectors stood at 20.3: 47.7:32.0; it was 28.4:43.1:28.5 at the end of the 6th, and 27.1:41.6:31.3 at the end of the 7th Five-Year Program periods respectively.

Significant achievements were also made in the reform of the economic system. The new financial system with tax decentralization at its core, and the new tax system with value-added tax as its main component, were set up. Policy finance and commercial finance were gradually separated. A macro regulating system emerged, and the market started to play a more major role in resource allocation. Also mapped out were the beginnings of a dominant public sector.

More than 1,100 cities at county level were opened to the outside world, and 13 bonded zones and other a lot of economic development zones were set up.

Foreign trade developed at an astonishing pace with total trade volume reaching US$1.0145 trillion, at an annual growth rate of 19.5 percent, higher than the 12.8 and 10.6 percent growth rates during the 6th and 7th Five-Year periods respectively. The value of annual export volume was 100 billion yuan, accounting for three percent of the world’s commodity trade.

By import and export trade volume, China ranked 11th in the world in 1995.

Foreign exchange reserves reached US$73.6 billion, 5.6 times higher than that at the end of the 7th Five-Year period.

Major improvements were also made to people’s lives. Per capita income was 1,578 yuan. Retail sales reached 6.7275 trillion yuan, representing an annual growth rate of 10.6 percent as compared to 3.3 percent during the 7th Five-Year period. Savings deposit balances in urban and rural areas reached 3 trillion yuan, 2 trillion higher than at the end of the previous planning period.

Per capita floor space of newly built houses in urban and rural areas reached 4.3 billion square meters. At the end of 1994, rural residents' per capita living space was 20.5 square meters, and 7.7 square meters for urban residents.

China registered an increase of 50 million in terms of social labor forces, including 37.4 million in the urban areas. The population of the poor decreased from 85 million at the end of the 1980s to 65 million in 1995.

Population control was achieved during this period, with growth rates dropping from 14.39‰ in 1990 to 10.55‰ in 1995. Rates of radio and TV population coverage reached 78.7 percent and 84.8 percent respectively, 4 and 5 percent respectively higher than in 1990.

Ninth Five-Year Plan, 1996-2000

The Fifth Plenary Session of the 14th CPC Central Committee adopted the Proposal on the Ninth Five-Year Plan on National Economy and Social Development and Long-Range Objectives to the Year 2010 on September 28, 1995. It was the first medium-length plan made under a socialist market economy, and a cross-century development strategy.

The basic tasks stipulated in the Plan were: to complete the second phase in the modernization drive; to cap population growth at 300 million by 2000; to quadruple per capita GNP as compared to 1980; to eliminate poverty; and to speed up the establishment of a modern enterprise system.

Long-range objectives to the year 2010 were: to double 2000’s GNP; and to continue to build the socialist market economic system.

Tenth Five-Year Plan, 2001-2005

The basic tasks set out in the 10th Plan were:

  • Achieve an average annual economic growth rate of about 7 percent.
  • Achieve a GDP of 12,500 billion yuan by 2005, calculated at 2000 prices, and per capita GDP of 9,400 yuan.
  • Increase the number of urban employees and the number of surplus rural laborers transferred to the cities to 40 million each, thereby controlling registered urban unemployment rates at about 5 percent.
  • Keep prices stable, and to maintain the balance between international revenue and expenditure.
  • Optimize and upgrade the industrial structure, and strengthen China's international competitiveness.
  • Achieve growth for the primary, secondary and tertiary industries at the rates of 13, 51 and 36 percent respectively of GDP, with those employed by these industries accounting for 44, 23 and 33 percent of the total number of employees in the country.
  • Improve the national economy and social IT levels.
  • Kick-start the operations of more infrastructure facilities.
  • Bring the development disparity between regions under effective control, and raise levels of urbanization.
  • Raise research and development funding to more than 1.5 percent of GDP, and strengthen sci-tech innovation capabilities, thereby speeding up technological progress.
  • Increase gross enrollment rates in junior high schools, senior high schools and higher education institutions to over 90 percent, 60 percent and 15 percent respectively.
  • Reduce natural population growth rate to less than nine per thousand, and capping population at no more than 1.33 billion by 2005.
  • On the environmental front, to increase forest coverage to 18.2 percent, and the urban green rate to 35 percent. The total amount of major urban and rural pollutants discharged will be reduced by 10 percent as compared with 2000, and more measures would be taken to protect and save natural resources.

The Plan also set out to increase the growth rates of disposable income of urban residents and the net income of rural residents to five percent each. In addition, objectives were set to increase housing floor space per urban resident to 22 sq m by 2005, and to install 40 percent of all households in China with cable TV.

Another key objective was to improve medical and health services in both urban and rural areas, as was enriching people's cultural lives, and enhancing social morality and security.

Eleventh Five-Year Guideline, 2006-2010

According to draft guidelines submitted to 2006 National People's Congress session:

Economic growth:

  • GDP up 7.5 percent annually from 18.2 trillion yuan in 2005 to 26.1 trillion yuan in 2010;
  • Per capita GDP up 6.6 percent annually from 13,985 yuan in 2005 to 19,270 yuan in 2010.

Economic structure:

  • Share of service industry's value added to GDP up from 40.3 percent in 2005 to 43.3 percent in 2010;
  • Share of employment in service industry up from 31.3 percent to 35.3 percent in 2010;
  • Share of research and development (R&D) spending out of total GDP up from 1.3 percent in 2005 to 2 percent in 2010;
  • Urbanization rate up from 43 percent in 2005 to 47 percent in 2010.

Population, resources, environment:

  • Population up from 1.30756 billion in 2005 to 1.36000 billion in 2010;
  • Energy consumption per unit of GDP down 20 percent in five years;
  • Water consumption per unit of industrial added value down 30 percent in five years;
  • Coefficient of effective use of water for irrigation up from 0.45 percent in 2005 to 0.5 percent in 2010;
  • Rate of comprehensive use of solid industrial waste up from 55.8 percent in 2005 to 60 percent in 2010;
  • Total acreage of cultivated land down from 122 million hectares in 2005 to 120 million in 2010;
  • Total discharge of major pollutants down 10 percent in five years;
  • Forest coverage up from 18.2 percent in 2005 to 20 percent in 2010.

Public service, people's life:

  • Term of education per capita up from 8.5 years in 2005 to nine years in 2010;
  • Coverage of urban basic old-age pension up from 174 million people in 2005 to 223 million people in 2010;
  • Coverage of the new rural cooperative medical care system up from 23.5 percent in 2005 to over 80 percent in 2010;
  • New jobs created for urban residents reaching 45 million in five years;
  • Number of rural laborers transferred to non-agriculture sectors reaching 45 million in five years;
  • Urban registered unemployment rate up from 4.2 percent in 2005 to 5 percent in 2010;
  • Per capita disposable income of urban residents up 5 percent annually in five years, from 10,493 yuan in 2005 to 13,390 yuan in 2010;
  • Per capita net income of rural residents up 5 percent annually in five years, from 3,255 yuan in 2005 to 4,150 yuan in 2010.

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