Since 1953, the Communist Government of the People’s
Republic of China has been developing and implementing 5-year plans (5YP) that focus
on economic and social development. China’s National Development and Reform
Commission is responsible for coordinating the development of each 5YP. A
critical element in the development of each of the past 5YPs has been the preparation and
consultation that takes place across all spheres of government including
state-owned companies to identify and agree on priority social and economic areas
that should be the focus of each 5YP.
The year 2015 will mark the end of the implementation
of the 12th 5YP and will be replaced by the 13th 5YP that
will come into effect in 2016 and will run till the year 2020.
From an Economic perspective, China’s 12th 5YP highlighted seven industrial initiatives whose contribution to Gross
Domestic Product (GDP) needed to grow from their 2011 level of approximately 2%
to 8% of GDP by the end of 2015. The seven industrial focus areas as outlined
in the 12th 5YP are: New Energy (Nuclear, Wind and Solar); Energy
Conservation and Environmental Protection (Energy Consumption Reduction);
Biotechnology (Drugs and Medical Devices); New Materials (Earths and High-end
Semi-conductors); High-End Equipment Manufacturing (Aerospace and Telecom
Equipment) and Clean Energy Motor Vehicles.
As the year 2015 nears the end, the question is to
what extent has China reached its goals as set out in the 12th 5YP?
Aligned to my interests in the ICT sector, I will
attempt to answer this question by focusing on the two areas of High-end
Equipment Manufacturing and New IT.
High-End Equipment Manufacturing
In the 12th 5YP great emphasis is placed
on investment in Research and Development (R&D) as a means to the manufacturing of the
“high-end equipment”.
Most cellphones that have been sold over the past few
years have been produced in China this includes cellphones sold by the mighty
Apple. Apple simply designs its devices and the manufacturing is carried out in
China by a company called Foxconn. Most white-labeled cellphones are produced
mainly in China. One of the new emerging mobile cellphone brands, Xiaomi is
Chinese. What is not clear is the exact role the Chinese government plays in
facilitating for R&D, especially among those companies which are not
state-owned.
New IT
The 12th 5YP specifically mentions new
generation mobile networks, cloud computing and high-end servers, among others
as areas that form part of New IT.
If one looks specifically at the mobile network equipment suppliers, a few
years ago, Swedish company Ericsson, Nokia Networks from Finland and Siemens
from Germany were the dominant providers. However, over the past few years, two Chinese companies
namely, ZTE and Huawei have become strong rivals to the three incumbents. According to the latest Gartner report on 4G or LTE infrastructure suppliers, Huawei ranks among the
leading LTE network suppliers, along side Ericsson, Nokia Networks and
Alcatel-Lucent of France. In the same report, Gartner lists ZTE as an emerging
LTE network equipment supplier. LTE networks are exactly the new generation mobile
networks that China’s 12th 5YP refers to as one of the focus
areas.
Whether or not these New IT and High-End Equipment Manufacturing as well as the other five
industry focus areas for the 12th 5YP will contribute 8% to China’s GDP by end of 2015 it is not clear however, what is clear is that the profile of Chinese companies
in the IT sector has certainly grown in stature and these companies are flourishing. I have no
doubt in my mind that this flourish is a direct result of the focus the
government of China has placed on these industries over the past five years, the 5YP therefore seems to play a role in galvanizing all areas of government and private companies to unite and push in the same
direction, for the benefit of the economy and ultimately the people of China.
Over the next few years, I shall watch with keen
interest as China implements its 13th 5YP.
Our Politicians must show willingness to create effective government
