Communist Party officials gather in Beijing this week to map out the next phase of economic development, just days before one of the most contentious U.S. elections in history will produce a president resistant to China’s ascent no matter who wins.
The country’s 14th five-year plan is expected to center around technological innovation, economic self reliance and a cleaner environment. Officials will also set goals for the next 15 years as President Xi Jinping seeks to deliver on his vow for national rejuvenation by gaining the global lead in technology and other strategic industries.
If China’s economy — which is already recovering swiftly from the coronavirus shock — can stick to the growth trajectory of recent years, it’ll surpass the U.S. within the next decade. The prospect of ever deeper frictions with the U.S. underpins Xi’s strategy to accelerate plans to shield China from swings in the world economy.
“It reflects China’s realist reassessment of the current global climate,” said Fred Hu, the founder of Primavera Capital Ltd., a private-equity fund based in Beijing. “Self reliance is about developing certain domestic capabilities through investments in R&D and innovation, a necessary and prudent response to external uncertainties.”
“However, it doesn’t mean China will repudiate its longstanding ‘open door’ policy and turn inward,” said Hu, who previously worked for the International Monetary Fund and led Goldman Sachs Group Inc. in China.
Xi and other officials have recently insisted the economy will further open its doors to foreign capital and competition, reflecting concerns about how the world will perceive the upcoming plans. In a speech in Shenzhen this month, Xi vowed to drive technological innovation, but softened that message by making it clear he wants a “new open economic system.”
That desire to avoid having the new plans become the latest lightning rod in the nation’s deteriorating relations with the U.S. and other trading rivals may mean the language around them is toned down. A previous strategy dubbed “Made in China 2025” went dark after it inflamed trade hawks in the Trump administration and spurred unease in Europe and other economies at risk of losing out to increased competition.
What Bloomberg’s Economists say…
“An emphasis on encouraging domestic circulation would not signal that China is closing its doors on the world. We expect the plan to encourage two-way trade and promote services trade.”
–Chang Shu and David Qu. Bloomberg Terminal clients can read the report HERE.
There’s already growing support in capitals from Washington to Canberra to restrict China’s access to strategic technologies. President Donald Trump’s aggressive stance toward China now has bipartisan backing and Chinese officials worry Joe Biden may be even more effective by bringing allies together to curb its development.
Which is why the new plans “will be much less explicit and not as specific as before, because the Made in China 2025 plan had brought so much trouble for China and helped energize the opposition from the U.S.,” said Chen Zhiwu, director of the Asia Global Institute at the University of Hong Kong. “So, I expect them to focus on general guidelines and stay vague on specifics,” said Chen, who is a former adviser to China’s State Council.
Officials have been quick to argue that what’s good for China is good for the world. Foreign ministry spokesman Zhao Lijian cited media reports to reporters on Wednesday that said a third of Mercedes Benz AG’s profits came from China in the third quarter and that China’s box office sales of more than $2 billion surpassed that of North America for the first time this year.
This proves that China’s massive market will generate “sustainable impetus for Chinese and world economic growth,” Zhao said.
That’s backed up by IMF forecasts. Bloomberg calculations based off the latest estimates show China will be the world’s biggest growth engine in the years ahead.
Unlike its peers, China’s economy is the only major one in the world forecast to grow this year after authorities aggressively contained the coronavirus.
Still, the number of countries that consider Chinese technology companies as national security threats is growing. Some are banding together to shift import dependency away from China as criticism grows over its domestic policies. Global companies are also assessing their supply chains due to reports of forced labor and China’s treatment of Uighurs in Xinjiang and its policies toward Hong Kong.
That resistance from the international community is pushing China to look inward for sources of growth. So far, tariffs and sanctions have done little to change China’s behavior. It maintains an extensive negative list of foreign companies operating in China that it may target, while recent actions aimed at Australian exports show it’s prepared to retaliate when it feels its interests have been threatened.
A more coordinated effort that brings together Europe, Japan and other American allies may be harder to resist and could push China onto a more isolated path.
That overseas wariness will impact the flow of outbound Chinese investment, said Hu, with the likelihood that state-backed investment into markets such as the U.S., U.K. or Australia is scaled back and ambitions around other projects, such as Xi’s signature Belt and Road Initiative, will be readjusted.
Growth Target
Five-year plans, a legacy of China’s command economy, have recently focused on industrial restructuring and maintaining a medium to high rate of growth. State media has reported that China will likely downplay the GDP target in the upcoming plan as it shifts to high-quality growth. While deliberations will be announced after the gathering, the document in its entirely will only be made public at an annual parliamentary session in March.
Delivering on self reliance while still benefiting from globalization — or “dual circulation” as the twin goal is dubbed by Chinese officials — will be a challenge given that hawkish rhetoric toward China will persist, said Wang Tao, chief China economist at UBS Group AG in Hong Kong.
“China is facing a more challenging external environment of development,” she said. “Going forward, China has to be more ambitious on domestic reform and opening. It will probably intensify.”
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
