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china’s-next-five-year-plan-will-bet-on-technology-at-home-and-abroad
China’s Next Five-Year Plan Will Bet on Technology at Home and Abroad

China’s Next Five-Year Plan Will Bet on Technology at Home and Abroad

Last updated: October 16, 2025 12:49 pm
By Jamie Daves and Jianli Yang
100 Min Read
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The forthcoming Fourth Plenum of the 20th Central Committee of the Chinese Communist Party (CCP) will not be an ordinary policy meeting. Scheduled for October 20–23 in Beijing, it will formally initiate the drafting process for China’s 15th Five-Year Plan, which will guide national development from 2026 to 2030.

To understand why this is so consequential, it is worth pausing briefly to explain the nature and significance of China’s Five-Year Plan system. Since the 1950s, these centrally formulated plans have served as the backbone of China’s economic governance. In the early decades of the People’s Republic, Five-Year Plans were instruments of Soviet-style command planning, setting production quotas and dictating investment priorities.

Since the era of reform and opening in the late 1970s, the plans have evolved into hybrid strategic frameworks that combine political direction, indicative targets, and policy coordination. They are neither rigid blueprints nor mere guidelines. Instead, they act as authoritative signals that shape the behavior of ministries, provincial governments, state-owned enterprises, private firms, and increasingly foreign investors. 

Major structural shifts in China’s economy – such as the liberalization of agriculture in the 1980s, the massive infrastructure push in the 1990s, and the transition toward innovation-led growth in the 2010s – have all been articulated, organized, and coordinated through Five-Year Plans. Each plan sets the tone for the nation’s social and economic priorities for half a decade, with ripple effects that extend far beyond China’s borders. The upcoming 15th Five-Year Plan is therefore not simply a bureaucratic document; it is the single most important economic roadmap that will shape the direction of the world’s second-largest economy through 2030.

This particular plan is expected to mark a strategic shift, from an economic model long powered by infrastructure investment, the property sector, and export surpluses toward one led by advanced technology and innovation. Through this shift, China is seeking to navigate its current economic difficulties, restructure the sources of legitimacy that sustain CCP rule, and redefine its role in global economic competition – particularly in the rapidly evolving field of artificial intelligence.

The key to understanding the upcoming plan lies in the political language that has emerged over the past year. One term, “新质生产力” (new quality productive forces), has dominated recent official speeches and reports. It captures Beijing’s ambition to replace the old growth drivers with a technology-intensive development model centered on innovation, efficiency, and system-wide modernization. 

Another term, “统筹发展和安全” (integrating development with security), reveals how the CCP intends to erect guardrails around this transformation, ensuring that technological development unfolds within a framework designed to protect political stability and national security. 

A third slogan, “有效市场和有为政府” (effective markets and proactive government), summarizes how the state will combine market mechanisms with centralized strategic direction to steer this transition.

This new Five-Year Plan will unequivocally demonstrate China’s all-out bet on technology as the master key to resolving its mounting domestic challenges, which include record youth unemployment, economic “involution” characterized by cutthroat competition and diminishing returns, and a rapidly aging and shrinking population. By embedding AI, robotics, and digital infrastructure across industries, Beijing hopes to generate new high-skill jobs, boost productivity, and compensate for demographic decline through automation and efficiency gains. 

At the same time, China’s leaders see technological primacy as the principal pathway to achieving global economic and geopolitical dominance, positioning China as a standard-setter and indispensable supplier in strategic industries from clean energy to next-generation information networks. More than a development program, the upcoming is a national bet that technology can simultaneously stabilize domestic society and elevate China’s international stature.

At the heart of this transformation is artificial intelligence. For the Chinese leadership, AI is not merely one technology among many; it is the central nervous system of a new techno-economic paradigm. Beijing has pursued what might be called a “deployment-first” strategy: rather than concentrating only on developing frontier models, it has focused on embedding AI throughout the economy. AI applications are spreading rapidly across logistics networks, manufacturing systems, surveillance platforms, urban planning, healthcare services, and the rapidly expanding “low-altitude economy” of drones and robotics.

By building dense physical and regulatory infrastructure to support these technologies, China is aiming to create a self-reinforcing ecosystem in which compute capacity, data governance, hardware supply chains, and industrial applications grow in tandem. This systems-integration strategy may allow China to achieve broad productivity gains faster than a purely laboratory-driven approach.

The emphasis on artificial intelligence also illustrates a deeper political transformation. For decades, the CCP’s performance-based legitimacy rested on the ability to deliver fast economic growth measured in GDP size. That model is becoming unsustainable. The property sector, which once accounted for nearly a quarter of China’s GDP, has entered a prolonged downturn; infrastructure investment faces diminishing returns; export growth is increasingly constrained by geopolitical frictions and slowing global demand. The leadership now sees technological advancement, rather than sheer economic expansion, as the new basis for legitimacy. 

By concentrating resources on building world-leading capabilities in AI, green energy, semiconductors, and advanced manufacturing, the CCP hopes to project a new kind of performance: one measured by technological strength, productivity quality, and global leadership in strategic industries. In this sense, the 15th Five-Year Plan represents a great leap forward in China’s economic transition. It seeks to elevate techno-nationalism to a higher plane, replacing the old growth narrative of “bigger is better” with a new mindset of “stronger is better.”

The global economic implications of this transformation are profound. China’s technology deployment strategy is likely to accelerate the diffusion of affordable AI-integrated technologies across the Global South. By exporting bundled solutions – such as renewable energy systems combined with AI-driven grid management, or open-weight language models adapted for local contexts – Chinese firms can reduce the cost of technological upgrading for developing countries. This could reshape global growth patterns, enabling countries that were previously priced out of advanced technologies to leapfrog stages of development. 

At the same time, the scale of Chinese production may intensify competition and drive down prices in sectors such as electric vehicles, solar power, and industrial automation, posing challenges to foreign companies that cannot match China’s manufacturing depth and logistical coordination.

This transformation also changes the nature of China-U.S. technological competition. Much of the debate in the United States has focused on the race for frontier innovation, particularly in AI model capabilities and semiconductor design. Yet China is playing a longer and more subtle game. Its focus is not only on inventing the most advanced technologies but on deploying “good enough” technologies at massive scale, integrating them into physical systems, and exporting them as part of comprehensive packages. The real contest may hinge not on who reaches artificial general intelligence first, but on who can organize data, compute, hardware, regulatory frameworks, and industrial applications into functioning systems most effectively. In this “logistics of intelligence,” scale and coordination often matter more than pure technological brilliance.

China holds some clear advantages in this domain. Its political system allows for the rapid mobilization of resources toward the fulfillment of national priorities, and its state capitalist model can coordinate industrial policies, urban infrastructure, and financing in ways that liberal market economies cannot easily match. The central and local governments can direct public procurement, orchestrate city-level pilot programs, and concentrate investment in critical nodes of the AI stack, such as compute capacity and data infrastructure. China’s integrated industrial base – especially in sectors like robotics, drones, and green energy – provides fertile ground for embedding AI in real-world applications. Moreover, its emphasis on open or adaptable AI models gives it a foothold in developing markets where cost and customization matter more than cutting-edge performance.

Yet the very political system that enables long-term resource concentration may also constrain China’s ability to achieve the ambitious goals of the new plan. At the core of Xi Jinping’s governance philosophy is the principle of “political security above all” (政治安全高于一切). Political control is treated as the supreme objective, and economic and technological strategies are subordinated to it. This creates structural tensions. 

Excessive political control often generates information bottlenecks, as local officials and private firms hesitate to share bad news or experiment outside narrow political bounds. Innovation, especially in cutting-edge technologies, depends on intellectual freedom, the cross-fertilization of ideas, and the unpredictable trial-and-error process that flourishes in open environments. A system that prioritizes ideological conformity over open debate can inadvertently stifle precisely the kind of disruptive innovation it seeks to cultivate. Political overreach can also distort capital allocation: local governments may direct funds into politically favored but economically inefficient projects, crowding out genuinely innovative private initiatives. 

Furthermore, the security-first approach to data and information – tight censorship, strict localization rules, and expanding controls on academic and technological exchange – risks isolating China from global knowledge flows. In sectors like AI, where breakthroughs depend on access to talent, collaboration, and diverse data sources, such isolation can slow progress over time. Political control also makes China’s regulatory environment volatile: abrupt crackdowns or campaigns, often motivated by ideological or security concerns rather than market signals, can erode private sector confidence and discourage the long-term investments that are crucial for sustained innovation. 

These dynamics reflect a fundamental dilemma: the CCP wants both the dynamism of a technological superpower and the control of a Leninist party-state. Reconciling the two may prove far more difficult in practice than it appears on paper.

For the United States, China’s strategy should be seen not only as a challenge but also as an opportunity to sharpen its own approach. The U.S. retains enduring strengths: world-leading universities, a culture of free inquiry, deep capital markets, innovative private firms, and a global alliance network that amplifies its influence. To meet the challenge, Washington should focus on enhancing deployment capacity, investing in digital and physical infrastructure, ensuring broad access to compute resources, and fostering public-private collaboration that accelerates AI integration into real-world applications. It should offer attractive technological partnerships to allies and emerging economies – grounded in openness, trust, and shared democratic values – to provide an appealing alternative to China’s state-driven model. By doubling down on its strengths rather than imitating China’s centralized approach, the United States can remain at the forefront of technological innovation while shaping a global ecosystem that reflects its interests and values.

The Fourth Plenum and the 15th Five-Year Plan to follow next year represent a pivotal moment in China’s development trajectory. If the plan succeeds, it could deepen China’s technological capacity and reshape the global competitive landscape. But the CCP’s determination to subordinate everything – including innovation itself – to political security may prove to be a significant internal brake on its ambitions. 

For the United States, this is a reminder that openness, pluralism, and stable rules are not weaknesses; they are enduring sources of strength in the technological age. If Washington can harness these strengths strategically, it will remain well-positioned both to compete with China and to lead in shaping the future of the global technological order.

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