Beijing's aatma nirbharta

Topics China economy

The Central Committee of the Chinese Communist Party, the People’s Republic’s highest decision-making body, has issued a communique for its Fifth Plenum, outlining the direction that the country will be taking over the next years and which will subsequently be enshrined in its Five-Year Plan. The communiqué, released late last week, reflects the optimistic view about the future that continues to prevail in Beijing in spite of the growth of international tensions in both the strategic and military domains. One major change from the past is simply the acceptance that a long-cherished goal, to “build a moderately prosperous society”, has in fact been achieved. This has been replaced with a more politically charged directive: Building “a modern socialist country”, reflecting the new hard line under President Xi Jinping about ever increasing Party control of every area of Chinese politics and the economy. The directive to “prepare for war” has also been introduced into the Plenum’s communique for the first time in five decades, alongside the ambition to build a military within the next seven years that will be able to challenge the US military on equal terms in mainland China’s immediate neighbourhood.

Yet it is in the economic domain that the maximum scrutiny of the Plenum’s communique will occur, and for good reason. The pandemic — which originated in China, though that country’s economy is also the first to apparently shake off its effects — has led to widespread expectations that the post-virus global economy will be significantly reconfigured. Existing competition, especially in the field of high technology, between the United States-led Western world and China, has only intensified over the past year. The communique reflects this reality by economic questions at the top of its recommendations, in particular calling for “innovation” to occupy a “central position” and for “scientific and technological self-reliance”. This comes at a time when several countries have moved to cut off the access of Chinese companies to the more high-tech and innovative parts of global supply chains, throwing those production processes into uncertainty. Compared to previous Plan periods, it is clear that Beijing expects that it will receive considerably less assistance from foreign know-how and capital than earlier. Crucially, the communique also calls for “a strong domestic market” and a “new development pattern”. Essentially, the CCP Central Committee realises that it must seek further growth from its domestic market and not from the rest of the world. This is an acceptance of the fact that global supply chains will be less incentivised to run through China in the future.

There are several implications of this for India in particular. China’s investment in its own military is likely to be enhanced in the coming years, further expanding the gap between the two countries in such capabilities. Given India’s fiscal constraints, a closer military relationship with other like-minded powers will become ever more essential. On the economic front, the emphasis on “self-reliance” and the “domestic market” echoes recent Indian government policies. But the impact for India is clear: If China is serious about cutting down on the policies that give its production an export rather than a domestic bias, then India still has a shot at cutting into the global supply chain. That will, of course, require the Indian government to give up on its own “self-reliance” idea.

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