China Kicks Off New 5-Year Plan
China has launched its 15th Five-Year Plan, which will run from 2026 to 2030. The new plan emphasizes boosting “domestic growth drivers” like internal consumption and tech self-sufficiency. The pivot is seen as a response to ongoing global trade tensions and supply chain vulnerabilities.
The new plan builds on the "dual circulation" strategy emphasized in the 14th Five-Year Plan (2021-2025), which aimed to bolster the domestic market while remaining open to international trade. This earlier strategy was a response to worsening relations with the United States and the economic impact of the COVID-19 pandemic. During the 14th plan, China's GDP crossed the 130 trillion yuan threshold, with an average annual growth of 5.5% in the first four years. A central theme carrying over is the drive for "technological self-reliance," a long-term goal to reduce dependence on foreign technology. During the previous plan, China's R&D spending grew significantly, with its intensity reaching 2.8% of GDP in 2025. The 15th Five-Year Plan aims to increase total R&D expenditure to over 3.2% of GDP, with a focus on breakthroughs in semiconductors, artificial intelligence, and biotechnology. The emphasis on domestic consumption is a direct attempt to address sluggish household spending and an over-reliance on investment- and export-driven growth. While the 14th Five-Year Plan included policies to cultivate new types of consumption, their success in boosting spending to desired levels was limited. The new plan, under the leadership of Xi Jinping, is expected to continue efforts to expand the middle-income group and improve the social safety net to encourage spending. Green development is another key pillar, with the 15th Five-Year Plan aiming for non-fossil fuels to account for around 25% of primary energy consumption by 2030. This continues the momentum from the previous period, which saw China's installed renewable energy capacity surpass that of thermal power for the first time. By the end of 2024, China's installed capacity for hydro, wind, solar, and biomass power generation was the largest in the world.
