China’s top leaders are gathering in Beijing this week, marking a pivotal moment as the Central Committee of the Chinese Communist Party (CPC) convenes for its fourth plenary session. Behind closed doors, these policymakers are mapping out the nation’s next Five Year Plan—a blueprint that will guide the world’s second-largest economy from 2026 to 2030. While the full details of the plan won’t be released until next year, officials are expected to offer hints about its direction in the days ahead, setting the stage for what could be a transformative period not only for China, but for the global economy as a whole.
This tradition of centralized planning isn’t new. As Neil Thomas, a fellow in Chinese politics at the Asia Society Policy Institute, told BBC, “Western policy works on election cycles, but Chinese policy making operates on planning cycles. Five Year Plans spell out what China wants to achieve, signal the direction the leadership wants to go in and move the resources of the state towards these predefined conclusions.” These meetings may seem routine, but history shows that the decisions made during these sessions often have profound and far-reaching effects.
China’s Five Year Plans have repeatedly reshaped both its own society and the world’s economic landscape. Back in the early 1980s, the country’s leadership embarked on a radical shift with the ‘Reform and Opening Up’ policies. Announced by Deng Xiaoping at the Third Plenum in December 1978 and woven into the 1981-1984 plan, these reforms introduced elements of the free market and established Special Economic Zones. According to BBC, this move “transformed the lives of people in China” and, over time, led to millions of Western manufacturing jobs being outsourced to China’s coastal regions—a phenomenon economists dubbed “the China shock.”
By the turn of the millennium, China’s leadership was already anticipating the next challenge: how to avoid the so-called “middle income trap.” The 2011-2015 Five Year Plan shifted focus to “strategic emerging industries,” particularly green technology like electric vehicles and solar panels. As climate change climbed the political agenda in the West, China poured resources into these sectors. Today, China is the undisputed global leader in renewables and EVs, and it controls much of the world’s rare earth supply chain—vital for chip-making and artificial intelligence. This dominance has given Beijing considerable leverage, as evidenced by recent moves to tighten export controls on rare earths, an act former U.S. President Donald Trump described as an attempt to “hold the world captive.”
The most recent Five Year Plan, covering 2021-2025, introduced the concept of “high quality development,” a vision championed by President Xi Jinping in 2017. This strategy aims to challenge American dominance in technology by advancing China’s own tech giants such as TikTok, Huawei, and AI models like DeepSeek. Yet, as Western governments grow increasingly wary of China’s technological ascent, they have responded with bans and export controls, especially on advanced semiconductors made by companies like Nvidia. In response, China’s leadership has doubled down on the goal of self-sufficiency, with “new quality productive forces”—a catchphrase introduced by Xi in 2023—now at the heart of the country’s economic policy. As Neil Thomas explained, “National security and technological independence are now the defining mission of China’s economic policy. Again, it goes back to that nationalist project that underpins communism in China, to ensure it never again is dominated by foreign countries.”
All of this is unfolding against a complex economic backdrop. According to Bloomberg, China’s economy grew by 4.8% in the third quarter of 2025 compared to a year earlier, slightly surpassing expectations and laying a “solid foundation” for achieving the full-year growth target of around 5%. This growth has been fueled in large part by a booming export sector, which has helped paper over deeper vulnerabilities within the economy. But as China’s export and infrastructure engines begin to sputter, the urgency to stimulate domestic consumption is growing.
Currently, private consumption accounts for only about 40% of China’s GDP—a stark contrast to the 60% seen in many Western countries, and the 70% mark in the United States, according to DW. Policymakers are now caught in a balancing act: on one hand, they need to invest in high-tech industries like semiconductors and artificial intelligence to secure economic sovereignty; on the other, they must address sluggish domestic consumption to ensure long-term stability. As Alexander Brown of the Mercator Institute for China Studies (MERICS) told DW, “The mood among private families and consumers in China is very gloomy. Nevertheless, Beijing will spend its money primarily on industrial policy in view of the current geopolitical situation and China’s goal of resilience.”
Geopolitical tensions are playing a significant role in shaping these priorities. The United States, under both Trump and Biden administrations, has tightened restrictions on China’s access to advanced semiconductor technology. This has made the quest for semiconductor sovereignty even more urgent for Beijing, as it seeks to reduce its dependence on foreign technology and secure its position as a global tech leader. Chen Bo, a senior research fellow at the National University of Singapore’s East Asian Institute, told Reuters that the policy document emerging from this week’s plenary session will “emphasize, and re-emphasize, support for high-tech research and industrial development.” For China’s leaders, manufacturing remains a “top priority” because, as Chen puts it, “when conflict arises, what ultimately matters is manufacturing, not services.”
Still, the need to boost domestic consumption cannot be ignored. Recent measures introduced by Beijing include consumer subsidies, pension increases, and childcare allowances, along with improvements to social security. These steps, according to Brown, have been “forced” by challenges such as demographic change, overcapacity, and declining exports. Some Chinese think tanks have even proposed increasing private consumption to 50% of GDP within the next decade. But achieving this will be anything but cheap. Citigroup estimates that the government would need to invest 20 trillion yuan—roughly $2.81 trillion—over the next five years to truly address the imbalance between supply and demand. This amount represents about 15% of China’s 2024 GDP.
Given these constraints, most analysts expect Beijing to continue prioritizing investment in technology and industry, at least for now. As Brown explained to DW, “They will continue to invest resources primarily in technology industries where there is an opportunity to become a world leader. The hope is that these achievements will generate a lot of money. This money, or tax revenue, can then ultimately be distributed throughout the entire economic system.” Larry Hu, chief China economist at Macquarie Group, added that action to stimulate domestic consumption will likely come when external demand contracts enough to threaten growth targets: “If you only rely on external demand and domestic demand is not working, then you will have unemployment problems and also deflation. If it continues like this for one or two years, it’s still okay. But in the long run, it will definitely be a problem.”
As the week’s meetings draw to a close, the world is watching closely for signs of where China’s leaders will steer the country next. The choices they make will ripple far beyond Beijing, shaping global trade, technology, and the balance of power for years to come.