Rewards and risks in China's Five-Year Plan

BEIJING - Investors are optimistic that China's new five-year blueprint will support ongoing development, but reform imperatives may need to be re-prioritized to meet the proposed growth target.

The draft outline of the Five-Year Plan, China's 13th since 1953, was unveiled on March 5. It will be finalized on March 16, when the national legislature annual session draws to a close.

With an ambitious "above 6.5 percent" average growth target for the period, it is obvious China does not want to miss its two long-hoped-for targets: Realizing "a moderately prosperous society in all respects" and doubling the size of its economy and per capita income by 2020 from the 2010 baseline.

The growth target is in line with a call by President Xi Jinping in November, when he said "a minimum 6.5 percent annual average growth" is needed to ensure these goals will be met before 2020.

Achieving such growth will not be easy. On the one hand, China is trading quantity for quality; on the other hand, problems such as industrial overcapacity, a backlog of unsold houses, mounting government debt and subdued global demand cannot be solved overnight.

The difficulties go beyond realizing admirable economic expansion. Racing toward the proposed targets without compromising the government's reform promises may be more difficult.

Economic pundits have long hoped that China can abandon its obsession with growth speed and give itself breathing space to address other priorities, such as restructuring state-owned enterprises, curbing wasteful investment and environmental protection.

Xi's government has shown greater tolerance for slower growth, as evidenced by a consistent downgrading of GDP targets since 2013 when he assumed presidency.

This year's growth target is within the range of 6.5 and 7 percent, slowing from last year's aim of "around 7 percent." The central government has also reduced the weighting of GDP when assessing the performance of local officials.

The latest proof of commitment to reform: China will lay off 1.8 million workers in the "zombie enterprises" of the bloated coal and steel sectors. The government has earmarked 100 billion yuan ($15.3 billion) to help those workers reestablish themselves.

China's achievement over the past decades is little short of a miracle and it will take the same determination to tackle some of the unfettered side effects.

"Dramatic development causes pervasive problems, and China is confronted with contradictions and challenges," Robert Lawrence Kuhn, an international corporate strategist, told Xinhua.

In an ideal scenario, new growth drivers grab the baton from old ones and propel growth seamlessly. However, Domestic consumption and services are not mature enough to pick up the slack.