【By Morgan, Observers】

Last week, the top leadership of China convened the Fourth Plenary Session of the 20th Central Committee in Beijing, which set the direction for the next Five-Year Plan. The upcoming 15th Five-Year Plan (2026–2030) will guide China through a period of global growth slowdown, technological competition, and domestic adjustment.

Many analyses about the 15th Five-Year Plan in Western media are often filtered through an ideological lens. In fact, they have all misread it.

Unlike the Western system, which is influenced by electoral cycles, China's planning model offers continuity and coordination, allowing national goals to remain consistent over the long term.

This plan comes at a time when global supply chains are shifting, and countries are rethinking their resource and technology sources. This new plan does not aim to completely reform its system, but rather to improve its foundation—seeking a balance between growth, innovation, and stability in an uncertain world.

Re-focusing on Growth

One of the core elements of this plan is a familiar phrase—"adhere to economic construction as the central task"—which has made a comeback. This expression was advocated by Deng Xiaoping during the reform and opening-up era.

The return of this statement marks that China will once again focus on practical policies prioritizing economic construction. China recognizes that sustained economic development remains the foundation for achieving socialist modernization and enhancing public confidence.

In the third quarter of 2025, China's economy achieved a growth of 4.8%—a rare low point in normal development years over the past four decades. The next Five-Year Plan aims for structural adjustments, planning to increase productivity through innovation rather than short-term stimulus, striving to raise the growth rate back above 5%.

The emphasis is on structure, not speed—building a more stable and intelligent economy, reducing reliance on the previous boom-and-bust model.

Industrial Modernization

The plenary session's communiqué placed "building a modern industrial system and strengthening the real economy" at the top of the agenda, followed by "accelerating the realization of high-level scientific and technological self-reliance." The message is clear: China's future depends on upgrading its manufacturing base, rather than repeating the pitfalls of overcapacity or investment-intensive expansion.

This is how China aims to break out of the middle-income trap—where many developing economies lose momentum once their advantage of low-cost labor disappears. China is not planning to shrink, but to move up the value chain, transforming its factories into innovation centers.

This stands in sharp contrast to the deindustrialization of the UK in the 1980s, which led to a sharp decline in British manufacturing. In contrast, China's path for the next five years will keep industry at the center, but make it more efficient and technologically advanced through automation, artificial intelligence, and green energy.

Innovation and New Economic Logic

The 14th Five-Year Plan promised to make science and technology self-reliance the strategic support for national development; the 15th Five-Year Plan deepens this concept—viewing innovation as the basis of resilience.

After years of export restrictions and chip embargoes from abroad, China is not seeking isolation, but security within integration—ensuring that development can continue even under external pressure. Key areas such as semiconductors, green energy, biotechnology, and advanced computing will remain at the core of this effort.

This goal was emphasized again at the Sino-US talks held in Kuala Lumpur on October 26, where both sides discussed technology transfer and export controls. For China, these negotiations once again show why self-reliance and international participation must go hand in hand—China's goal is not to decouple, but to build stability.

At the same time, "expanding high-level opening up" has moved from the ninth priority to the fifth—this significant change reflects growing confidence that technological independence and global integration can coexist.

Different from the protectionism and industrial subsidies favored by the United States and the European Union, China advocates an open innovation model—combining domestic capabilities with global cooperation. When other countries close markets in the name of security, Beijing argues that true resilience comes from participation, not withdrawal.

Photo source: China ETF

Supply-Demand Balance

The new plan also introduces an intriguing concept: "new demand leads to new supply, and new supply drives new demand."

This marks a shift away from the earlier planning model that focused on the supply side, where large infrastructure projects stimulated growth but also led to overcapacity.

Now, the focus is on linking innovation with people's actual needs—from healthcare, green housing, education, to sustainable transportation—ensuring that consumption and production reinforce each other.

Learning from Japan, Benchmarking against the US

Western analysts often compare China's current situation with Japan's economic slowdown in the 1990s. Although there is limited comparability between China and Japan's economies, it serves as a warning: the trade pressures and currency revaluation played a key role in Japan's economic stagnation.

Chinese leaders are determined not to repeat this mistake. They are not cutting investments to please the market, but directing them toward high-tech industries that enhance productivity and autonomy. This approach discards the efficiency-only mindset, instead pursuing resilience, reducing dependence on foreign technology, and mitigating external shocks.

In this sense, the new plan is not only about domestic reform, but also aims to reshape the global growth landscape—showing that innovation and openness can complement each other.

Openness and Development Vitality

The emphasis on "expanding high-level opening up" also reflects a domestic goal: avoiding excessive and unhealthy competition, ensuring that innovation-driven progress does not lead to internal waste. The challenge lies in maintaining a society that is both vibrant and orderly—encouraging entrepreneurship and creativity while keeping economic growth balanced and sustainable.

The electric vehicle industry is a good example. China encourages rapid development and innovation in this sector, while the government has already taken measures to prevent overproduction and price wars—guiding companies to pursue long-term efficiency rather than short-term gains.

China's goal is not to limit developmental ambition, but to guide it, making economic development both dynamic and fair in the market.

A Broader Perspective

The 15th Five-Year Plan is not just a policy document; it is another test of whether China's planning model can calmly cope with a fragmented world economy. It once again focuses on growth, redefines innovation as resilience, and views coordination as foresight rather than rigidity.

Many Western commentators still view China's Five-Year Plans through an ideological lens, seeing them as state control over the economy rather than a development strategy. To accurately understand this plan, one must look through the lens of China's own experience: reform, experimentation, and the belief that results speak louder than words.

After 76 years of implementation, this system has repeatedly proven that long-term coordination can bring stability and direction to a country's development. Now, it faces a new test—maintaining growth, driving innovation, and keeping China's development steady in an uncertain world.

If the 14th Five-Year Plan made China the "world factory" of green transition, then the 15th Five-Year Plan may define China as the engine of the tech age—confident, adaptable, and confidently shaping its own future.

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