China’s 12th Plan: Big Challenges, Vast Opportunities

Policy Brief Number 5
February 2012

China’s 12th Plan: Big Challenges, Vast Opportunities

Author: Shahid Yusuf

A weakened demand for exports in the second half of 2011 – coupled with rising wages – dampened manufacturing activities in 2012 in China’s key coastal provinces, which for the first time in almost three decades saw their growth fall short of the national average. Strategy and policies were being reappraised in the light of dramatically altered external circumstances and a sharpening of the challenges confronting the Chinese economy. Written around the release of the 12th FYP, this paper addresses four of the most urgent challenges: structure of demand, inequality and the middle class, urbanization, and innovation.