China’s “Plan” – A Question of (a) Character

May 8, 2006

As a Chinese, from my birth at the end of 60s, last century, I witnessed the great impressive change in China in the passing 20 years…

Until very recently, when the Chinese press mentioned the government's Five-year Plan, it used the official four-character phrase wu nian ji hua (五年计划), which has been in use since the 1950s. But over the past several months, a new character has appeared in the phrase. It’s now wu nian gui hua (五年规划). In the English press, a variety of words have been used to reflect this change: The "plan" is now referred to as a "program", "road map", "guideline", "blueprint" or "framework". What’s going on?

The Five-Year Plan was once the most visible artifact of the Marxist centrally planned system for determining China’s economic and social activities. But over the past 27 years, China has systematically transitioned into a socialist market economy. Today, less than 5% of the country's merchandise is priced by the government. The number of industrial state-owned enterprises has plummeted from more than 120,000 in the mid-1990s to around 30,000 in 2005. The government departments that were at the core of the planning system – the State Planning Commission and the State Economic Commission and their local counterparts – don't exist anymore.

In short, the Chinese government no longer intervenes in most business operations and no longer controls most economic activities. Though the Five-Year Program remains as strategic a document as its predecessors, setting directions and intentions for the long term; detailed execution is out of the government's hands and has shifted to the market and enterprises. What a difference a character can make.

by JIANMAO WANG AND LINDA G.SPRAGUE, Harvard Business Review, April 2006-05-07.