Beijing
—
China has spent the past five years cultivating domestic innovation and new technologies. The next five years will be dedicated to deploying the fruits of that labor to transform our economy and our standing in the world.
This will be the overarching message as thousands of delegates from across China gather in the Chinese capital for “Two Sessions.” The “Two Sessions” are carefully planned annual meetings in which the nation’s leaders lay out their priorities for the year ahead and the rubber-stamp legislature approves them.
The pomp and ceremony of the rally has long been a symbol of China’s tightly controlled political process, but China’s authoritarian leaders are well aware of the juxtaposition that arises as the world’s most powerful democracy, the United States, is torn by sectarian infighting and embroiled in a new spiral of conflict in the Middle East.
At the top of the agenda is approval of the 15th Five-Year Plan, a blueprint for how the Chinese government will drive economic growth over the next 10 years.
The details of the new plan have been worked out behind closed doors for months by leader Xi Jinping’s aides. Now, around 3,000 members of the National People’s Congress have given the green light to the document, and a ceremonial vote will be live-streamed across the country, perhaps with some adjustments based on their feedback.
Buoyed by the recent success of Chinese AI startups going toe-to-toe with their American rivals, EV champions dominating global sales, and humanoid robots captivating the world, Beijing is using that blueprint to further spur innovation and build China’s economic power and international influence.
Leaders are also well aware that they are developing the country’s next economic plan, one that presents profound risks and opportunities.
The world order is in flux as the United States changes its policies and is increasingly seen as divided and unpredictable. Rapidly evolving technology is changing work and war. China’s economy faces slowing growth, weak consumer confidence and a shrinking population, while risks from trade tensions and technological competition with the United States remain.
The rapidly escalating war in the Middle East, sparked by the US and Israeli bombing of Iran and the killing of pro-China leader Ayatollah Khamenei, has added a new layer of geopolitical uncertainty.
Whether China can take advantage of this changing landscape to accelerate its rise as a world power will depend, in part, on how well the Xi government can steer the economy.
China’s five-year plans, a mechanism borrowed from the Soviet Union decades ago, are critical to the ruling Communist Party’s efforts to keep its vast bureaucracy and nation of 1.4 billion people in line with its vision.
Since the last five-year plan in 2021, China has dealt with major shocks. The country has endured years of Chinese government-mandated coronavirus restrictions, but the crisis in the real estate sector continues into its fifth year, squeezing family wealth and dampening a once-robust industry. China in 2025 has survived a second bitter tariff war with the United States, but in recent years has faced increased restrictions on access to American high technology.
But the Chinese government has also made significant progress in domestic technology, a key goal of previous plans that were all about increasing self-sufficiency and ending dependence on American and other Western technology.
Although China still lags behind U.S. high-tech in some areas, including semiconductors, experts say it’s clear Beijing is moving forward with confidence and preparing to further strengthen and refine its current plans.
“If the[previous]five-year innovation policy was primarily defensive, this one is more proactive, with a focus on achieving key technology breakthroughs and accelerating technological and industrial integration,” said Yue Su, chief China economist at the Economist Intelligence Unit.
“Beijing appears to view the current wave of technological and industrial transformation as a historic opportunity to improve productivity.”
A long list of “recommendations” for the plan, published by the Communist Party’s highest leadership body last fall, called for “special measures” to achieve “decisive progress” in core technologies such as chips and industrial machine tools.
The company was also clear about making early advances in what it called “industries of the future”: quantum technology, biomanufacturing, hydrogen and fusion power generation, brain-computer interfaces, embodied artificial intelligence, and 6G mobile communications.
But observers say the Chinese government is not only pushing for innovation in the plan, but also trying to apply it on a large scale in China’s large manufacturing industries and large cities.
Brian Wong, a researcher at the Center for Modern China and the World at the University of Hong Kong, says there is a “shift from the passionate pursuit of technological breakthroughs for innovation to the identification and development of more sophisticated applications and pervasive architectures for innovation.”
And the signs so far suggest that China also recognizes the impact this vision will have on its workforce and the need to invest in training and education.
Wong added that officials have been clear that achieving a “homegrown high-tech manufacturing future” requires a “skilled and adaptable workforce.”
But even as China adjusts its high-tech vision for the future, observers will parse its next plan to understand how China intends to address its most significant economic factors, such as the long-term risks of weak domestic consumption and a rapid birthrate.
Last year, China’s trade surplus, which relies on exports to other countries, hit a record high, sparking friction with countries that blame it for flooding their markets.
“China’s dependence on foreign demand for a significant portion of its production and employment is not a very comfortable position,” said Bart Hoffman, a professor at the East Asia Institute at the National University of Singapore and former World Bank China director.
He added that the plan would likely give “more emphasis” on tackling this issue and focus on strengthening China’s social security net.
China’s top-down planning is also influencing its economic challenges.
When the central government dictates which areas it wants to focus on and subsidize, companies rush to join in the effort, fostering oversupply and intense competition (known as “entrainment”), contributing to China’s deflation and export dependence.
Analysts say that apart from strengthening domestic demand, Beijing will aim to raise China’s economic role globally, not just as the world’s factory floor but also as a source of technology such as AI chatbots, chips and robots that countries use to power their economies.
Hong Kong’s Wong said that rather than focusing on exporting goods overseas or building infrastructure, “becoming a major supplier of technical know-how and expertise for overseas investment” is likely to be a stated goal in future plans.
In a recommendation last fall, the party leadership nods to this, saying that a “new round of technological revolution and industrial transformation” has created “positive elements that will enable China to act proactively on the international stage.”
Western officials and rights groups have raised a number of concerns about the global adoption of Chinese technology, including that authoritarian China is helping governments around the world censor and monitor their citizens.
But when it comes out of Beijing this week, the message from the halls of power will be a different one: that China’s innovation and development are a boon to the world.
