Jorge Costa Oliveira
These days, Beijing is hosting the “Two Sessions” (the National People’s Congress and the Chinese People’s Political Consultative Conference), where the most important event will be the approval of China’s 15th Five-Year Plan (2026–2030), a major strategic document reflecting China’s vision of becoming a more influential and self-sufficient global power through the modernization of its economy and society, with a focus on stability, technological innovation and national security.
The 15th Five-Year Plan marks a crucial turning point. Instead of the explosive growth targeted by earlier plans, it foresees “moderate growth [of 4.5–5% in 2026]” in GDP, focused on high value-added output, quality, resilience and global technological leadership, laying the groundwork for the goal of the so-called “socialist modernization” by 2035.
One of the central pillars of this planning is strengthening technological independence, with R&D expenditure increasing 7% annually, emphasizing what China calls “new quality productive forces.” This means less reliance on low-cost manufacturing and greater focus on: (i) semiconductors and artificial intelligence, sectors where China seeks self-sufficiency to mitigate external sanctions; (ii) biotechnology and quantum computing, areas where China aims to help define global standards; and (iii) advanced manufacturing, including fully automated factories and cutting-edge industrial robotics.
The “dual circulation” strategy is another pillar of the plan, designed to shield China’s economy from global shocks and geopolitical tensions: (i) internal circulation (the priority), strengthening the domestic market and household consumption so the economy depends less on exports; and (ii) external circulation, maintaining global trade but in a more strategic manner, focusing on “Global South” markets and the Belt and Road Initiative (BRI).
Another important pillar is the green transition and the concept of “ecological civilization.” This 15th plan is vital to China’s commitment to peak carbon emissions before 2030 in areas such as: (i) clean energy, with a massive expansion (already underway) in solar, wind and nuclear infrastructure; (ii) decarbonization, with incentives for heavy industries (such as steel and cement) to reduce their carbon footprint; and (iii) electric vehicles (EVs), maintaining global dominance in the battery and EV supply chain.
National and social security form the fourth pillar, now considered as important as GDP, with public policies in key areas: (i) food and energy security, aimed at reducing vulnerability to supply-chain disruptions; (ii) demographics, promising aggressive policies to cope with population aging and encourage higher birth rates; (iii) “common prosperity,” aimed at reducing inequality between urban and rural areas to maintain social stability (including plans to urbanize an additional 5–7% of the rural population); and (iv) external defense, with a relatively modest 7% increase in the military budget in 2026.
Given China’s importance in the global economy, this five-year plan will have worldwide implications, particularly for trade and investment, as well as technology and innovation.
However, it is important to remember that the historical backdrop contains many uncertainties and that China’s economy is going through a challenging period with several fragilities. Despite the Chinese economy’s [strong] official figures, a recent International Monetary Fund Country Report (No. 26/44) warns of “persistent deflationary pressures,” with the risk of “deeper-than-expected contraction in the property sector, which, combined with high debt levels, could contribute to greater domestic demand weakness, entrenched deflation, and continued reliance on exports.”
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Updated 16:59: The author corrected the R&D expenditure increase.
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