New era for China and the world

Since China launched its reform and opening-up over 40 years ago, its economy has witnessed rapid growth which transformed China from a low-income country with a per capita gross national income of $200 in 1978 to an upper-middle-income country with a per capita gross national income of $10,410 by the end of 2019, according to the World Bank statistics. China is projected to exceed the current World Bank threshold of $12,536 per capita gross national income to become a high-level income country by 2023, according to a business report released by China Daily.

The world's most populous country's journey from a low-income country to an upper-middle-income one, which will have taken 45 years, is mainly the result of rounds of opening-up or, in other words, continuous structured reforms. The 14th Five-Year Plan (FYP) is the latest set of structured reforms which will play an essential role in steering country's economy in a new direction from 2021 to 2025.

After what the world economy witnessed in recent years, a consensus within economists started to emerge that governments must act on market failures. Although the 14th FYP is designed to strengthen the market's role in allocating resources, state institutions will intervene in areas, which would boost domestic consumption, innovation and green growth.

Increased domestic consumption will mean to less vulnerability to external shocks. According to data on the New York-based eMarketer website, in 2019, total retail sales in China reached $5.3 trillion, compared to total retail sales in the US of $5.5 trillion. China is expected to surpass the US to be the largest retail market in the world.

According to the Global Innovation Index prepared by Cornell University's SC Johson College of Business, INSEAD and the World International Property Organization, China ranked 14th in terms of global innovation in 2020. China is the only developing country which made it to the first 20 on the list. That being the case, innovation was mentioned 47 times in the draft proposal of the 14th FYP, which gives a clear signal as to how China aspires to be one of the leading innovation countries.

The rapid growth in recent decades has brought greater prosperity and higher living standards to hundreds of millions people in China, but it has also had adverse effects on the environment. Much of these were as a result of the reliance on coal to meet the energy demand. Although the share of coal in the energy mix fell below 60 percent in 2019, China still consumes half the world's coal.

The 14th FYP focuses less on GDP as the leading performance indicator, and instead focuses more on "green growth" which was mentioned 19 times in the draft proposal of the 14th FYP. If the green growth targets in the 14th FYP are reached, there will not only be positive results in China domestically, but China will also play a crucial role in combatting climate change globally.

As the country moves toward the new era, China will transform itself again in the coming decades. With the world's largest domestic market, being more innovative and sustaining green growth, China in the new era will have a significant impact on the world.

Umut Ergunsü is a faculty member at Guangxi University of Science and Technology's School of Economy and Management and a research fellow at Peking University's Center for International Political Economy.

The opinions expressed here are those of the writer and do not necessarily represent the views of China Daily and China Daily website.