A Study on China’s Five-Year Economic Plan

Abstract

Purpose - This study is to understand China’s economic development process by analyzing the successful aspects of China’s Five-Year Economic Plan. Design/methodology/approach-This study suggests the implications of Chinese economy focusing on China’s literature materials and researches on Five-Year Economic Plan. Findings-Since its founding in 1949 China has begun to establish and implement the first five-year economic plan (1953 ~ 1957). The Great Leap Forward of the late 1950s and the Cultural Revolutionary Movement in the late 1960s had tragic consequences. After the reform and opening up in 1978, capitalism was introduced, and through the continuous implementation of the five-year economic plan combined with the socialist market economic system China has become the second largest economic power in the world thanks to rapid economic development. China has carried out a preemptive policy that develops the eastern coast region first and spread it throughout the country from 1978. Meanwhile, the five-year economic plan promoted incentives such as designating special economic zones, controlling wages, and providing tax incentives to foreign-invested companies. As a result, foreign-invested companies have utilized this to form a virtuous cycle of the economy, including increasing exports, creating a domestic consumer market, and upgrading industrial structures. Research implications or Originality - In particular, China’s 13.5 plan and China Manufacturing 2025 set an ambitious goal to be the world’s strongest country in 2049 which is the 100th anniversary of its founding. Accurate understanding of the implementation of the five-year economic plan by the Chinese government is crucial to understanding China’s economic policy, reform and construction.