Every few years since 1953, the Chinese government has presented a new economic master strategy, known as the five-year plan (FYP). These blueprints have been geared at spurring growth and unity as the nation transformed from an agrarian economy to an urbanised, developed powerhouse.
The task that faced China’s leaders as they met in early October 2025 to map out their 15th such plan, however, was complicated by two profound challenges: sluggish domestic growth and intensifying geopolitical rivalry.
The resulting recommendations for the 15th Five-Year Plan (FYP), covering the period from 2026 to 2030, represent a document forged in an era of crisis. The proposals, adopted at the “Fourth Plenary Session” of the 20th Communist Party of China (CPC) Central Committee, are a direct response to a more cautious outlook toward the external environment.
The official communiques are rife with language acknowledging rising uncertainties and unforeseen factors, warning that China must be prepared to weather even dangerous storms.
The plan signals a decisive choice by the leadership under Xi Jinping to prioritise strategic resilience, economic security, and technological self-reliance over the difficult, politically costly structural reforms required to fix China’s unbalanced economy.
The solution presented by Beijing is, in essence, more of the same. The plan explicitly doubles down on the state-led model that, while powering China’s rise, has yielded growth at the cost of imbalances that have hurt many households.
The document champions a massive, top-down push for industrial upgrading and high-tech investment, while offering little more than lip service to the daily struggles of hundreds of millions of consumers.
This strategic gamble, betting that state-directed innovation can secure China’s future, risks failing to address and may even exacerbate the widening gap between surging industrial capacity and tepid domestic demand.
Deconstructing NQPF
The centrepiece ideology of the 15th FYP, and Beijing’s anointed solution to its economic woes, is the concept of New Quality Productive Forces (NQPF). This term, which has rapidly moved from ideological abstraction to the bedrock of the new five-year plan, signals an unapologetic embrace of Marxist concepts to justify and enforce a new wave of state-led, top-down industrial policy.
At its core, NQPF is a big picture grand vision designed to maintain strategic focus and discipline as China attempts to move from a manufacturer of quantity to one of quality.
It is the state’s strategic answer to the question of what comes after the property-and-infrastructure-led growth model. This vision aims to transform China from the world factory into an exporter of cutting-edge technology.
This transformation is planned to occur along two main axes. First, optimising and upgrading traditional sectors like mining, metallurgy, chemicals, textiles, and construction through a massive push for digitisation, automation, and greening.
Second, and as a primary focus, the plan aims to cultivate and expand high-tech sectors by developing strategic and emerging industry clusters in fields such as new energy, new materials, aerospace, the low-altitude economy, and future industries like quantum technology, biomanufacturing, and artificial intelligence.
This ambitious agenda is not being left to market forces. It will be funded and directed by a new national system that represents a more centralised, top-down form of economic management. This system relies on massive state-led investment, which has already poured over $150 billion into the semiconductor industry alone since 2014. The 15th FYP’s goals will be supercharged by the new $47.5 billion “Big Fund” (the third phase of the Integrated Circuit Industry Investment Fund).
This capital is often channelled through Government Guidance Funds (GGFs), which act as a form of state-run venture capital. These funds are set up at provincial or city levels to steer investment into strategic sectors as identified by the government’s five-year plan priorities.
This mechanism actively politicises business, enabling local governments to build both financial resources and technical capacities and giving public servants, as shareholders, discourse power to influence and control private enterprises.
This NQPF strategy, while presented as a futuristic vision, is a direct, state-driven solution to a devastating market-based problem caused by the collapse of the real estate sector. An analysis from the European Central Bank (ECB) highlights the critical context.
China’s old investment-led growth model relied on three main pillars—infrastructure, real estate, and manufacturing. With derisking policies initiated in 2020, investment growth in “the rapidly growing housing sector… turned negative in late 2021.” This severely impaired one of the three main pillars of investment growth.
Building a sanction-proof economy
The 15th FYP’s focus on “self-reliance” is a defensive strategy to build a sanction-proof economic fortress. This involves a whole-of-nation effort to gain autonomous control over the commanding heights of the 21st-century economy, from microchips and AI to green energy and food. This is not a plan for global integration; it is a plan for managed confrontation.
The absolute top priority of the 15th FYP is to achieve greater self-reliance and strength in science and technology. This is a direct, militaristic response to Western, particularly the United States, export controls on advanced technology. The plan’s goal is to break the technology blockade and indigenise critical technologies to secure the material and technological foundation of China’s modernisation.
Semiconductors are the central battlefield. The state is pumping tens of billions into domestic firms to close the gap in advanced manufacturing, viewing it as a matter of national survival.
Beyond chips, the plan outlines a deep tech stack that Beijing intends to dominate. It seeks to accelerate the development of future industries such as quantum technology, biomanufacturing, and brain-computer interfaces.
For quantum and AI, the plan signals a crucial shift from experimentation to deployment. The “AI+” initiative is a national strategy aimed at empowering all sectors and establishing China as a global leader in innovation, setting international technology standards.
Demand remains mere slogan
The official vision, as articulated by state media, is of a “happy China where everyone enjoys easy access to childcare, education, employment, medical services, elderly care, housing, and social assistance.”
This narrative, however, crumbles under analytical scrutiny. The plan is deficient in specific policy measures to actually achieve these lofty social goals. Economists and analysts who argue that China needs to consume more will be disappointed by the plenum’s direction.
There is no major change in policy to facilitate the more equitable distribution of income required for a true consumer-led rebalancing.
The plan’s authors, and the “New Quality Productive Forces” strategy, fundamentally misunderstand, or perhaps wilfully ignore, the root of China’s economic imbalance. As BCA Research notes, China’s weak consumption share of GDP does not stem from low consumer spending, but from an investment sector that ‘has expanded too rapidly for too long.’
The 15th FYP, with its NQPF-driven industrial policy, doubles down on this very investment model. This supply-side focus, aimed at high-tech manufacturing rather than services, is unlikely to create the broad-based job or income growth needed to power consumption. It may, in fact, hurt job creation and income growth, ultimately weighing on household demand.
A true rebalancing would require a massive transfer of wealth from the state-controlled investment sector to the household sector. This would mean fully realising common prosperity, which is politically toxic for the current power structure.
This is because “China’s political system is based, to a considerable extent, on state control of the economy, which stabilises the party’s position and also benefits the various elites.”
A thorough rebalancing toward consumption would fundamentally threaten this control. It would reduce the power of state-owned firms and diversify capital away from direct central control. In the leadership’s view, it would tend to impact the party’s position.
For the next five years, the world will be dealing with a China that is more self-reliant, more confrontational, and more state-controlled, but also one that is likely to be slower-growing and permanently unbalanced.
The leadership in Beijing has made its bet that party control and technological security are more important than household prosperity and market-based balance. This is the high-stakes gamble that will define the global economic and geopolitical landscape for the next decade.