Following the Communist Party of China’s fourth plenum, debate has intensified over the direction of the country’s economy, with manufacturing remaining a central pillar of Beijing’s ambitions for the coming decade.
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The Communist Party’s Central Committee’s recommendations for the 15th five-year plan, released on October 28, reaffirm China’s goal of achieving socialist modernisation by 2035, measured by gross domestic product (GDP) per capita – a vision outlined in the 14th five-year plan and proposed by Deng Xiaoping during his time as paramount leader in the 1980s.
While no official benchmark has been defined, a State Council analysis estimates the target at about US$30,000 per capita (in 2020 prices) by 2035. With GDP per capita standing at US$13,303 in 2021, China would need to roughly double its income level within the next decade to reach that goal.
As economist Justin Yifu Lin has noted, differences in GDP per capita between China and mid-level developed economies largely reflect disparities in labour productivity, measured by output per employee. Productivity growth, therefore, will be a key driver in achieving China’s 2035 target and has been identified as one of the main objectives in the recommendations.
Although China’s labour productivity growth has consistently outpaced that of the Group of Seven economies since the early 2000s, its momentum has slowed since the 2008 global financial crisis. Growth is projected to ease to around 4.5 per cent in 2025, underscoring the challenge of doubling GDP per capita by 2035.
An employee works at a tractor and truck motor manufacturing company in Qingzhou, Shandong province, on August 27. Photo: STR / AFP
Manufacturing holds the key to boosting China’s overall productivity. After 2022, when the country’s labour productivity growth fell to its lowest level this century, Beijing has rolled out a raft of policies to promote what it calls “new quality productive forces”. The strategy doubles down on developing emerging industries and upgrading traditional sectors to raise productivity and ultimately sustain economic growth.
