Are you looking for a China 14th five-year plan summary? China has started on its next 5-year plan, which will cover its plans between 2021-2025. For those that don’t know, the Community Party of China has been in power since 1949. And between 1950-2020, there have been fourteen 5-year plans (over seventy years.)
Canadian companies wanting to do business in China need to align their goals with the Chinese governments (within reason.) If you go against the government of China (in China), things are not going to work out well for your business. If you co-operate, you might be able to get grants and other benefits.
A focus on the five-year plan starting in 2021 (“the 2021 plan”) will be improving the Chinese economy after the difficulties of the US/China trade war and COVID-19.
China was the first country to start fighting the virus, and therefore it has been the first country to apparently recover. This will mean that China is now in a unique position to grow its global influence ahead of other countries.
Reducing The Amount Of Time To Start A Business
Some relevant successes of China during its 13th 5-year plan period was reducing the amount of time that it takes to open a business. It used to take over a month to start a business in China, now you can do it in around five days.
Photo: The author Alistair Vigier in Shanghai
In my opinion, the next step in improvement is for China to innovate its banking industry. It is extremely difficult to get your company set up with a bank account within China. If you just want a savings account, no problem. If you need to be able to do business outside of China and charge foreign credit cards, it’s almost impossible unless you are a big company.
According to the 2021 plan, China also plans to continue pushing innovative trials in free trade zones, including the new Hainan Free Trade Zone. This should be something that every Canadian company looks into.
Fixing China’s Corporate Debt Problem
An issue that the Chinese government wants to fix over the next five years is the amount of debt that many Chinese companies are holding. Further, many Chinese people have borrowed a massive amount of money to purchase real estate or build unrealistic real estate projects. There are some malls in China that are completely empty.
Photo: The amount of debt that companies and households in China hold
Anti-Monopoly Policies | China 14th five-year plan
Something new that has started taking plan in China is the attempt to fight back against companies that dominate the market, like Alibaba. Jack Ma was largely seen as possibly the most powerful man in China. Now he has been forced out of the spotlight.
This will create opportunities for Canadian start-ups to enter the Chinese market, and increase competition in online business activities.
This should also increase the ability for small to medium-sized companies to raise funding. Right now, it seems all investors put their money into Alibaba, JD.com or Tencent. These large companies are already well funded. It’s the small companies that need the money and has the opportunity for massive growth.
14th five-year plan China text English
Another priority according to the 2021 plan will be to reduce China’s needs to import technology from other countries. One of the contributors to this strategy is sanctions and embargoes of technology companies that trade with Chinese state companies in some critical sectors. The focus is on national security and promoting local Chinese companies over foreign ones.
In conclusion, this does not mean there are not opportunities for Canadian technology companies in China. It just means it’s likely best to avoid doing business in sensitive areas.
Alistair Vigier is the CEO of ClearWay Law, a company that helps people hire a lawyer in China.
Editor’s note: Below is some feedback that we received on this article. We have provided it to examine both sides of the coin.
Whilst it is generally agreeable that business registration process is largely simplified, there are sectorial requirements for license application that are to some extent, dilatory. Business certificate and license are two different subjects. Antecedently, business certificate was only conferred after the company collected all required sectorial licenses. The reform helped separate the two. It takes much less time to set up a business now, however, business permit/license approval process is a totally different job.
Some ghost cities have been proven to be bustling after a few years of development. Urbanization is indeed an interesting subject with a multi-trillion RMB market behind it. Do you have precise data about the average household debt ratio in China? In-store shopping has ebbed because of the rise of e-commerce, however, occupancy level is braced by other retail business i.e. F&B, edutainment outlets and others. For your reference, there is a 30% spike in housing index in Shanghai since Q3 2020.