The People's Republic of China's fifteenth 5-year plan came into effect this week. It outlines how Beijing intends to approach this new phase, aiming to maintain control over its destiny in a world that is more unpredictable than ever.
The draft plan submitted to the Chinese Parliament that was approved this week reveals how China intends to adapt to its internal structural challenges as well as international trade tensions, even as its economic growth gradually slows down.
With a domestic market that is still struggling and further penalized by the real estate sector, China has set its growth target for 2026 at between 4.5% and 5%, the lowest level since 1991.
While technological dominance is the top priority of this plan, particular attention is also paid to the domestic market. Household consumption only represents about 40% of Chinese GDP, compared to 69% in the United States.
Chinese leaders have clearly understood this, and numerous measures aimed at supporting consumption and adjusting supply to demand have already been undertaken. Although the Gini index (a measure of inequality) has significantly improved over the past fifteen years, it remains less favorable than in Western European countries, for example. China is therefore betting on an increase in incomes and a better distribution of these to strengthen the role of its population in growth and to stabilize it.
The objectives include the intention to consolidate the foundations for an industrial move upmarket. The 5-year plan provides for a strategic allocation of resources towards the modernization of traditional industries, notably steel, textiles, and construction, but also towards emerging industries and, of course, the technologies of the future.
Without a doubt. the most important axis remains innovation and technological dominance. We can expect to see China move ever closer to self-sufficiency in many critical areas, in what resembles a true technological race for supremacy.
In the document, “artificial intelligence” is mentioned more than 50 times, Reuters points out. This technological dominance appears to be the best response to the demographic risk China faces. With a shrinking workforce, the only viable response is an increase in productivity. The document also designates the tech sector as the “new quality productive forces.”
Such an ambition cannot be successfully carried out without total control over the critical resources that are necessary for this development. We mentioned a desire for self-sufficiency: this extends from expertise to the control of critical resources. China fully intends to immunize itself against the export controls it suffered last year.
China also intends to move forward in many other areas, such as green energy, even though no target has been set for reducing coal consumption. This also applies to agriculture, with a desire to reduce inequalities with urban residents, as well as an increased - albeit selective openness - to the world, notably with facilitated visas and growing soft power.
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