What are China's five-year plans?

BEIJING - Chinese leaders are gathering in Beijing to discuss the development plan for the world's second largest economy over the next five years.

At the fifth plenary session of the 18th CPC Central Committee, China's top officials will review proposals for the 13th five-year plan (FYP) for the country's national economic and social development from 2016 to 2020.

What exactly are the so-called five-year plans? Why are they so important? Here, we've provided some background on why the plans make such a large impact.

What are the five-year plans?

The FYPs are a set of social and economic development initiatives that map out China's strategies for growth in a five-year period. The plans usually include numerical growth targets such as annual gross domestic product (GDP) goals and offer policy guidelines for reforms. For example, the 12th FYP (2011-2015) set an average annual growth target of around 7 percent.

Since the release of the first five-year plan in 1953, China has published 12 such documents, though the official name for the last two programs changed from "five-year plan" to "five-year guideline" to reflect a much more market-oriented economy.

How are the five-year plans drafted?

The drafting of the FYPs is a long and refined process. The preparation for the 13th FYP started as early as August of 2013, when the nation's top economic planner,the National Development and Reform Commission (NDRC) initiated the mid-term review of the previous FYP. The assessment collected information on progress of the 12th FYP and gave direction to what will be addressed in the next FYP.

The NDRC began formulating the 13th FYP last April and released 25 major areas including economy, education, and environmental protection to be researched by industry experts, university scholars, and other think tanks. The public was also encouraged to give suggestions through the Chinese social media network WeChat.

Based on public comments and extensive research, the NDRC submitted a report of general thoughts concerning the FYP to the CPC Central Committee. A separate team organized by the CPC Central Committee will take the thoughts into consideration and draft a report of recommendations to be discussed at the four-day fifth plenary session.

The NDRC will then finalize the FYP based on the recommendations, further expert suggestions and public comments. The final FYP needs to be approved by the National People's Congress, the country's top legislature, during meetings in March 2016.

Why are the plans important?

China's FYPs offer a glimpse of priorities that the central and local governments will adhere to in the next five years. Though the official name "five-year guideline" now suggests looser control from the government, the plans still identify areas that researches, investments and human resources will concentrate on.

Past plans suggested the direction of the economy and offered industry-specific goals that both domestic and foreign observers keep an eye on. The 10th FYP, for example, stated the market should play a fundamental role in allocating resources. The 11th plan stressed transforming the country's economic structure from investment and export-driven to consumption and service-oriented. Both goals were strictly implemented and the Chinese economy has undergone structural change since then.

China has made significant progress since the release of the 12th FYP in 2011. In the past five years, the Chinese economy has achieved stable growth, with an expected average GDP growth of 7.8 percent from 2011 to 2015, much higher than the global average rate of 2.5 percent.

People's living conditions have improved. The urban unemployment rate has been kept low. The average Chinese life span has risen by a year, and almost all Chinese are covered by medical insurance.

The 13th FYP will be the first under President Xi Jinping's leadership and is considered strategically important as the year 2020 will be the last year of realizing China's goal of "a moderately prosperous society in all respects by the centennial anniversary of the founding of the CPC".

The 13th FYP also attracts global attention as the economy is going through structural change. What will be the next growth target? The world is watching.