China charts new economic course focused on innovation, reform

Chinese President Xi Jinping. China has unveiled its 15th Five-Year Plan (2026-2030), signalling a shift from high-speed growth to high-quality development with an unusual focus on artificial intelligence, space, deep-sea technology and domestic consumption. The plan was adopted during the fourth plenary session of the 20th Central Committee of the Communist Party of China (CPC) in Beijing from October 20 to 23. Officials say it marks a pivotal phase in China's push toward socialist modernisation by 2035. The China Daily reported the plan will bridge past achievements and future ambitions as China faces slower global growth, demographic pressures and risks in the property and financial sectors. Zhang Jun, chief economist at China Galaxy Securities, said the plan must "anchor the 2035 goal" while offering "forward-looking guidance informed by both past achievements and shifting global dynamics." He noted the next five years will be "a key stage of fully advancing the development of new quality productive forces" driven by technology, digital transformation and emerging industries. Under the plan, China will expand its digital economy, invest in artificial intelligence and develop industries including commercial spaceflight, the low-altitude economy and deep-sea technology. It also targets reducing reliance on foreign technology by addressing "bottleneck technologies" and securing supply chains. Zhang explained fiscal policy will increasingly shift "from investing in goods to investing in people" with higher spending on childcare, education and social welfare. He added services accounted for 46.1 per cent of household consumption in 2024, still below advanced economies, leaving room for growth. Experts noted domestic demand will remain central as external conditions grow uncertain. The National Development and Reform Commission (NDRC) has invited research on reform priorities including balancing state-owned and private sector growth and improving fiscal coordination between central and local governments. Luo Zhiheng, chief economist at Yuekai Securities, said China's economy is moving "from high-speed growth to high-quality development and from supply shortages to insufficient demand." "Demand shortfall remains the central challenge during the 15th Five-Year Plan period," said Luo, adding, "Boosting consumption and optimising investment structure will be major priorities." Luo identified trade frictions, demographic shifts and fiscal pressures as major risks but said China could strengthen non-U.S. partnerships, unify domestic markets and accelerate human capital and technology development to offset them. He urged fiscal and taxation reforms to "balance short-term debt control with long-term modernisation goals" while stabilising property and stock markets to protect household wealth. Xiong Yuan, chief economist at Guosheng Securities, said the plan rests on four pillars - economy, reform, technology and livelihoods. "Science and innovation will drive policy while employment, income, education, housing and 'common prosperity' stay at the heart of development," noted Xiong. Analysts agree the plan reflects China's effort to manage short-term stability while preparing for a future led by innovation and sustainability. "We must pursue two main lines - accelerating new quality productive forces on the supply side and building a strong consumption-driven economy on the demand side," said Luo. The 15th Five-Year Plan sets China on a path toward resilient, innovation-led and inclusive growth as it aims to achieve comprehensive modernisation by 2035.

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