"High-quality development" will not come easy
China’s new 14th Five Year Plan (2021-2025) contains frequent references to “high-quality development” – the phrase appears 28 times – thereby setting the tone for China’s own evolution and for its economic engagement with other countries in the Belt and Road Initiative (BRI).
Declarations that China needs to transition from “high-speed” to “high-quality” growth are far from new. However, as 2021 marks the start of a “new development stage” that the CCP has said must be characterized by “high quality development” 1 the phrase has now been elevated to a benchmark for policy making.
“High quality development” is a nebulous concept, used to imply the general upgrading of China’s economy. To paraphrase one Communist Party explainer, the question is no longer “Do we have enough?” but “Is it good enough?” 2 More specifically, it represents greater emphasis on internal consumption and efficiency, and a shift away from the reliance on the fixed asset investment that has powered growth in the past. It also implies a strong focus on high-tech industries, with an eye to boosting overall productivity and creating independent supply chains.3
Like much of the 14th Five Year Plan, the chapter on the BRI largely rehashes familiar tropes. However, its themes also offer a broad indication of what “high-quality development” might mean for the BRI:
- The “digital” and “health silk road” are both prominent; BRI countries may see more Chinese “smart city” solutions and vaccine diplomacy
- A greater focus may be placed on green tech and renewables, along with green finance and greater scrutiny of polluting investments
- Other sustainability measures (e.g., debt sustainability) may be addressed through the expansion of governance mechanisms for BRI investments, convergence with international norms, and other strategies to limit risk
- A move away from hard infrastructure towards other forms of connectivity; BRI policy documents 4 mention “priorities” such as “financial integration” and “people to people” connections
- The ongoing decline in the role of policy bank loans from the Export-Import Bank of China (Exim) and China Development Bank (CDB)
- An increase in BRI projects financed through private public partnership (PPP) arrangements and co-financing with other international institutions
- More instances of “cooperation in third markets” between Chinese and Western companies
A genuine upgrade of the BRI is in Beijing’s interests. There is undoubtedly a rhetorical aspect to the new theme of a “high-quality” BRI, in response to domestic and international criticism. However, that does not diminish the fact that the slogan also matches China’s own development needs. Beijing’s ambitions for its domestic economy and its foreign policy goal of ensuring a stable international environment for continued growth will be well-served by engaging with the rest of the world in a more sophisticated, greener and cleaner way.