With new five-year plan emphasising science and industrial modernisation, Beijing is taking steps to protect China from protracted US battle
Beijing appears to be planning for a protracted battle with Washington for economic supremacy, with China’s latest five-year development blueprint being drafted to sharpen its competitive edge and address weak links laid bare by the trade war with the United States.
President Xi Jinping this week called for public feedback for the nation’s 2026-30 national economic development plan, with an emphasis on science and modernisation, reflecting the strategic thinking of Chinese leaders. A comprehensive catalogue of quantifiable socio-economic goals will be made public in March.
Analysts expect China to continue putting greater emphasis on hi-tech advancements, manufacturing resilience and domestic consumption, given the president’s repeated call for “new quality productive forces”, as well as the development of future and frontier industries, while upgrading traditional manufacturing sectors.
Meanwhile, Chinese authorities could still set a high target for gross domestic product growth – one of the most watched parameters as China tries to shore up its economy.
It is also hoped that the next five years covered by the new plan, the 15th of its kind, will help realise Xi’s goal – first uttered in 2017 – for China to “basically achieve socialist modernisation” by 2035.
Subsequent updates of that goal in recent years include targets such as seeing per capita GDP reach the level of moderately developed countries.
Such five-year plans are a legacy of China’s top-down planning, which the president has hailed as a “distinctive institutional advantage” of the nation’s socialist system.
The significance that Xi has attached to the plan for the next five years is clear.
In late April, he chaired a symposium with provincial officials and said the plan should align with China’s opening-up policies while ensuring domestic economic stability.
“In the next five years, China’s development should be driven by technological innovation, anchored in the real economy, and advance the upgrading of traditional industries while safeguarding people’s well-being,” Xi said.
Xi also called for a better understanding of how changes in the international landscape may affect China, and to proactively adapt and optimise the country’s economic structure accordingly.
This year marks the end of the 14th five-year plan, from 2021-25, and the country is well on track to achieve many of its goals.
In March, National Development and Reform Commission director Zheng Shanjie said during a “two sessions” news conference that the combined economic expansion during the current plan was expected to exceed 30 trillion yuan (US$4.16 trillion).
Yang Weimin, a former deputy head of the Office of the Central Financial and Economic Affairs Leading Group, who participated in the drafting of previous five-year plans, said China was still capable of achieving economic growth for 2026 to 2030 at a rate no slower than what it saw in the past five years – around 5 per cent – and that the forecast was in line with China’s potential growth rates of 4-4.5 per cent.
“To reach the economic target [for the next five years], China’s economy should expand by an additional 38 trillion yuan during the period,” Yang said in an article in March.
Analysts from the Industrial Bank, based in Fujian province, projected in a research note in early May that China’s economic growth would likely slow during the 15th five-year-plan period, but that the potential growth rate was expected to remain at a relatively high level of around 4.5 per cent.
The Chinese Academy of Social Sciences has predicted that China’s potential economic growth rate for the 2026-30 period will be 4.88 per cent.
To realise that potential, Yang said growth should be primarily driven by domestic demand. “It will be challenging for China to maintain high-speed growth in exports,” Yang wrote.
Other policy advisers have also lent their voices to the call to adopt a new growth model for the next five years.
Wang Yiming, who serves as vice-chairman of the China Centre for International Economic Exchanges and is a central bank adviser, said there was a sense of urgency to shift to a consumption-led development paradigm amid growing external trade pressures.
“[The external pressure] will push China to transform from an investment-and-export-led growth model toward one driven by consumption and innovation,” Wang said at last weekend’s Tsinghua PBCSF Global Finance Forum.
“In the face of these challenges, further deepening reforms and expanding opening-up [efforts] offer a path forward.”
China’s shrinking population, persistent shortfalls in both original technological innovation and breakthroughs, and an incomplete transition from traditional growth sectors to new economic drivers, will continue to pose challenges to the country’s economic development, he warned.
Other than consumption, Beijing’s tech- and innovation-led push to fuel growth will be another thread running through the development strategies for the next five years and beyond.
Huang Qifan, former mayor of the southwestern megacity of Chongqing, said at a summit on Wednesday that “new quality productive forces” would become the strongest driving force for China’s manufacturing sector in the upcoming five-year plan, and even in the longer-term blueprint through 2040.
The term largely refers to advanced manufacturing and hi-tech, as well as future industries, with a variety of supportive programmes to foster “little giants” and “hidden champions” in industrial sectors.
