China Kicks Off New Five-Year Plan
China has launched its 15th Five-Year Plan (2026–2030), with a heavy emphasis on bolstering domestic growth drivers. Policy documents highlight investment in innovation, consumption, and infrastructure as key pillars to ensure a strong start. The plan signals continuity in the country's long-term development model, aiming to project stability.
This plan builds on the "dual circulation" strategy, first introduced in the 14th Five-Year Plan (2021-2025). The strategy aims to reduce reliance on overseas markets by prioritizing domestic consumption ("internal circulation") while remaining open to international trade ("external circulation"). This approach was a response to a deepening rift with the United States and global economic uncertainties. A central pillar of the new plan is achieving technological self-reliance, a goal that has been elevated to a national strategic priority. Faced with U.S. export controls on advanced semiconductors and other technologies, Beijing is channeling significant investment into basic research and key sectors like AI, quantum computing, and biotechnology to secure its supply chains. Total R&D expenditure is targeted to exceed 3.2% of GDP. The plan accelerates the development of a "modern industrial system" with advanced, intelligent, and green manufacturing as its backbone. This involves upgrading traditional industries and fostering strategic emerging sectors such as aerospace and new energy. The goal is to more deeply integrate the digital economy with real-world industry through initiatives like the industrial internet. To spur domestic demand, the plan seeks to raise personal incomes and expand the middle class, creating new opportunities in healthcare, elder care, and digital services. However, this focus is challenged by structural issues, including a prolonged slump in the real estate market, which has dampened household confidence and wealth. Household consumption in China accounts for only around 40% of GDP, far below the global average of about 60%. Environmental protection and a green transition remain central pillars, as China aims to peak its carbon emissions by 2030. The plan calls for a massive expansion of renewable energy sources like solar and wind power, the promotion of electric vehicles, and the construction of green industrial parks. Food security has also been given increased prominence, with a shift towards technology-driven agriculture. The plan emphasizes protecting farmland, improving grain production, and upgrading the entire agricultural value chain with a focus on seed innovation and smart agriculture, including the use of AI and big data.
