China's 13th five-year plan to boost consumption

Against the backdrop of a lingering slowdown in the past two years, top leaders' concern about the economy's continuing growth is fully justifiable, economists said.

Chinese state media reported the rate would be adjusted to 6.5 percent for the next five years, down from its previous rate of 7 percent, set in 2010 at the meeting for the 12th Five-Year Plan. What exactly are China's five-year plans and what can we expect from the new one?

A final plan, after taking into account these proposals, will be formally ratified by the annual session of China's national legislature, the National People's Congress (NPC) in March next year before taking effect.

With China's exports and GDP growth slowing, a key question is what economic growth rate the ruling Communist Party's Central Committee will set for the country's "13th Five Year Plan", which will cover the 2016-2020 period.

According to Capital Economics' chief China economist, Julian Evans-Pritchard, the "flaws with how the GDP deflator is calculated, along with political pressure to meet growth targets that have become increasingly at risk, have meant that official growth rates have not slowed almost as quickly as most third party measures of growth in recent years".

Douglas Turnbull, head of Chinese equities at Neptune, said: "We see the most volatile thing about the Chinese economy is investor sentiment towards it. The reality on the ground is far more sanguine".

"People keenly anticipate having more statutory vacation days", the Global Times, a tabloid run by the Communist Party mouthpiece People's Daily, said in an op-ed Monday.

Instead, Mr Wu said the government should focus on implementing long-delayed financial and SOE reforms as well as lower barriers to foreign investment, according to China Daily.

At the same time it cut benchmark interest rates for the sixth time since November, and lowered the amount of money banks must keep in reserve, as authorities try to stimulate the economy and avoid a hard landing. Moreover, automation is helping to offset the decline in the growth of the labor force (the result of population aging and slowing migration).

Other poor figures also added to the disappointment.

Hundreds of Chinese officials gathered Monday in Beijing for a four-day meeting to plan domestic policy until 2021. "The Chinese service sector share to GDP ratio is still very low relative to OECD (Organisation for Economic Co-operation and Development) standards - it's close to 50 percent, whereas in typical OECD it's 60 percent".

The new five-year plan, China's 13th, has henceforth garnered increasing attention from observers both home and overseas. And it said citizens expected "better and more affordable education and medical services, and accessible social security".