Top Chinese officials begin a crucial meeting today to discuss a new five-year economic and social road map that could reveal whether Beijing values growth over reforms and also identify opportunities to foreign investors.
The four-day meeting is being eagerly watched by global financial markets as anxiety grows about the health of China's economy.
Some believe the 13th Five-Year Plan, which will set new social and economic targets for next year to 2020, could see the world's No. 2 economy aiming for an annual growth rate of around 6.5 per cent, a drop from the 7 per cent rate in the current plan.
It would mark the first time China is aiming for sub-7 per cent annual growth since the reforms and opening-up in the late 1970s.
Talk of a lower target stems from calculations by a top economic planning agency on the expansion needed to meet China's aims of doubling per-capita gross domestic product (GDP) and overall GDP by 2020 from 2010 levels.
Assuming China meets its official growth target of around 7 per cent this year, it would require an annual GDP growth rate of 6.56 per cent between next year and 2020, said the National Development Reform Commission.
State media on Saturday quoted Premier Li Keqiang as saying last Friday at the Central Party School, the Communist Party's training academy, that China has never said it must grow by 7 per cent this year, but within a reasonable range.
Dr Wang Xiaolu, deputy director of the National Economic Research Institute in Beijing, said it is clear the growth target in the Five-Year Plan would be lower, given weakness in the economy.
Latest figures last Monday showed that China's economy grew in the third quarter by 6.9 per cent, its weakest pace since 2009.
"Slower growth is a reality. But the target should not be the focus of the new Five-Year Plan, given the more important task of advancing reforms," he told The Straits Times.
Reuters yesterday, however, quoted insiders as saying that the new plan would set a target of around 7 per cent as a signal that growth was more important than reform.
Mr David Loevinger, an analyst at asset management firm TCW, said investors should welcome a lower growth target, or even no target, in the new Five-Year Plan, which will be formally approved at an annual parliamentary session next March.
"How China grows is more important than how high," he told The Straits Times.
HSBC's China economist Ma Xiaoping believes a higher than 6.56 per cent target would reflect the leadership's view "that development will remain the No. 1 priority for the next five years".
"This will involve a combination of economic growth, social development, environmental protection and cultural evolution. In our view, the quality of growth holds the key to China's new pattern of development," he added in a note.
The new plan is expected to be unveiled this week at the end of the fifth plenary session of nearly 400 Central Committee members, which is held behind closed doors at a Beijing hotel. It is among the seven plenary sessions, known as plenums, that the decision-making Central Committee holds between national party congresses every five years to set policies and personnel changes.
University of California at San Diego analyst Victor Shih believes an area of big reform could be in the hukou policies, China's household registration system that limits rural residents' access to urban welfare services.
Ahead of the 19th National Party Congress in end-2017, where successors to President Xi Jinping and Premier Li are set to emerge, the plenum could also see key personnel deployment, say observers.
At least three new Central Committee members - to be appointed from highest-ranking alternate members - will replace the ousted United Front Work chief Ling Jihua, Hebei boss Zhou Benshun, and work safety chief Yang Dongliang.
Professor Bo Zhiyue of the Victoria University of Wellington in New Zealand said a new Tianjin party boss - a post that guarantees entry into the Politburo - could be appointed.
Prof Bo also told The Straits Times that the plenum marks the last occasion for Mr Xi to promote General Liu Yuan, political commissar of the People's Liberation Army general logistics department, into the Central Military Commission (CMC).
Gen Liu, born in 1951 and touted to head a military graft-busting unit, would have to retire next year if he does not enter the CMC in order to be exempted from the retirement policy.
The progress of reforms and personnel changes go hand in hand, said Renmin University political analyst Zhang Ming, adding that this plenum is crucial for Mr Xi, given the need to stabilise the economy and improve implementation of reforms from two previous plenums.
"Stalled reforms could increase opposition to Xi's planned personnel changes at the 2017 party congress," he told The Straits Times.
LIKELY PLENUM OUTCOMES
THE 13TH FIVE-YEAR PLAN
The five-year plan, which will set economic and social targets spanning 2016 to 2020, will be discussed at the fifth plenary session of the 18th Central Committee. China could set a sub-7 per cent annual growth target for the first time.
ECONOMIC, FINANCIAL REFORMS
China could pledge more reforms for state-owned enterprises to free up resources for private enterprises. Greater market access to service sectors such as healthcare, finance and education is expected too. Full interest rate liberalisation may be pledged.
China may abolish its one-child policy in a bid to solve the problems of declining birth rates and an ageing population, after dismal results from a loosening of the policy in 2013. The household registration system may also be relaxed to speed up urbanisation and improve incomes and spending.
Promotions of officials are expected, though they would pale in comparison to the last such plenum in 2010, which saw President Xi Jinping become vice-chair of the Central Military Commission. At least three officials could become Central Committee members, while a new Tianjin party boss and Fujian governor may be appointed.
Also expected is a greater focus on fighting pollution and setting more environment-related targets as China steps up its efforts against climate change.
This article was first published on October 26, 2015. Get a copy of The Straits Times or go to straitstimes.com for more stories.