What China is building into the 15th Five-Year Plan

second part...
While the 14th Five-Year Plan was a period of stabilization and accumulation of new resources, the 15th Five-Year Plan is billed as a stage of high-quality development, technological self-sufficiency, strengthening the domestic market, and ensuring comprehensive economic and social sustainability. The next major section is devoted to the 15th Five-Year Plan (2026–2030). The report explains that the draft plan includes 20 key indicators covering economic development, innovation, prosperity, green transition, and security. A flexible approach to GDP growth has been maintained: the economy is expected to grow within an "appropriate range," with specific annual growth rates determined based on circumstances. This should lay the foundation for doubling per capita GDP by 2035 compared to 2020 levels, elevating the country to the level of a moderately developed country. For innovation, an average annual increase of at least 7% in national R&D expenditure is envisaged. The environmental component sets a goal of reducing CO2 emissions per unit of GDP by 17% over the five-year period. The social component shifts the focus to employment, income, education, medicine, health, and care for the elderly and children. In terms of security, food and energy production become key.

The four strategic priorities of the 15th Five-Year Plan are formulated particularly clearly. The first is high-quality development through innovation, advanced manufacturing, the digital economy, and environmental transformation, including increasing the share of core digital industries to 12.5% of GDP. The second is strengthening the domestic economy through expanding demand, increasing consumption, investing "in people and material assets," creating a single national market, and strengthening the market allocation of production factors. The third is promoting universal prosperity: developing the education system, increasing the average length of schooling to 11.7 years, increasing life expectancy to 80 years, expanding care infrastructure for the elderly and children, supporting employment and incomes, and narrowing the gap between urban and rural areas and between regions. The fourth pillar is simultaneous development and security, including food and energy security, risk management in real estate, debt, and regional financial institutions, and improving public safety.

The draft plan outlines 109 major projects to address these objectives. Of these, 28 are related to new productive forces and technological development, 23 to infrastructure and energy, 9 to urban-rural integration, 25 to welfare and social development, 18 to green transition and the environment, and 6 to food and energy security. The report emphasizes that this involves not only capital investment but also institution-building.

2026 Goals and the Logic of Macroeconomic Policy
The report defines 2026 as the first year of the new Five-Year Plan, and thus the year for laying the foundation for the subsequent years. The key objectives are stated as follows: GDP growth of 4.5–5%, with the intention of exceeding this target in practice; urban unemployment of approximately 5.5%; over 12 million new jobs; inflation of approximately 2%; personal income growth in line with the economy; basic balance-of-payments equilibrium; a grain harvest of approximately 700 million tons; and a reduction in CO2 emissions per unit of GDP of approximately 3.8%. The government explains that this set of goals takes into account the need to leave room for structural adjustment, risk mitigation, and reform in the first year of the Five-Year Plan.

Fiscal policy has been declared more proactive. The budget deficit is set at approximately 4% of GDP, the aggregate deficit is 5.89 trillion yuan, and total general budget expenditure is 30 trillion yuan, a record high. The government plans to issue 1.3 trillion yuan of ultra-long special treasury bonds for national strategies, security, equipment upgrades, and trade-in programs, plus 300 billion yuan of special bonds to recapitalize major state-owned banks. Local governments will be allowed to issue 4.4 trillion yuan of special bonds, which will be used primarily for projects, replacing hidden debt, and repaying overdue government payments. The government specifically emphasizes strict budgetary discipline and the need to spend "every cent saved" on development bottlenecks and urgent needs.

Monetary policy is described as "sufficiently accommodative." Beijing reserves the right to reduce reserve requirements and interest rates, pledges to maintain sufficient liquidity, and aims to develop structural monetary instruments to channel funding to priority areas such as domestic demand, science and technology, and micro, small, and medium-sized enterprises. The objective of reducing the overall cost of financing, improving monetary policy transmission channels, and maintaining the yuan exchange rate at an accommodative and balanced level is emphasized. Significant emphasis is also placed on the consistency of reforms and macropolicy: virtually all measures, both economic and non-economic, must now be tested for consistency with the overall macroeconomic framework.

Ten Priority Tasks for 2026
1. Strengthening the Domestic Market
The first priority task is the expansion of domestic demand. The government intends to stimulate consumption through an urban and rural income growth plan, targeted support for low-income groups, augmentation of property-based incomes, and the improvement of wage-setting systems and social protection mechanisms. 250 billion yuan in ultra-long bonds has been allocated to trade-in and equipment replacement programs, while a dedicated fiscal-financial coordination fund of 100 billion yuan is to further stimulate demand through interest subsidies, guarantees, and risk compensation instruments. Concurrently, authorities pledge to expand consumer credit subsidization, develop new consumption scenarios, revitalize offline consumption and lower-tier markets, ease excessive restrictions on expenditure in culture, tourism, sport, and healthcare, and improve conditions for purchases by foreign tourists. The investment component of this same priority encompasses 755 billion yuan in central budgetary investment, an additional 800 billion yuan in ultra-long bonds for national strategic and security purposes, and 800 billion yuan in new policy-based financial instruments to support private investment.

2. Cultivating New Growth Drivers
The second priority task is the accelerated formation of new growth drivers. The government's strategy centers on the modernization of traditional industries, the technological transformation of production chains, and the digital restructuring of manufacturing. 200 billion yuan has been designated for equipment renewal. Simultaneously, China intends to cultivate new pillar industries, including integrated circuits, aerospace and aviation, biomedicine, and low-altitude economy, as well as industries of the future — future-generation energy, quantum technologies, biomanufacturing, embodied artificial intelligence, brain-computer interfaces, and 6G. Separate emphasis is accorded to the support of specialized SMEs, start-ups, unicorn enterprises, and angel and venture capital. In the services domain, Beijing seeks to expand science and technology services, information technology, modern logistics, financial services, intellectual property services, and inspection and testing industries. In the digital dimension, AI Plus remains one of the foremost flagship initiatives, encompassing the development of AI agents, hyperscale computing clusters, public cloud infrastructure, satellite internet, 5G-integrated industrial internet, and a national data governance system.

3. Achieving Scientific and Technological Self-Reliance
The third priority task is the establishment of an indigenous scientific and technological foundation. China intends to strengthen fundamental research, major technology programs, and national laboratories, increase the share of basic science in R&D expenditure, and accelerate technology transfer to industry. Particular emphasis is placed on the development of three major innovation hubs: Beijing–Tianjin–Hebei, the Yangtze River Delta, and the Guangdong–Hong Kong–Macao Greater Bay Area. Another critical component involves the integration of education, science, and human capital policy: the recalibration of university disciplines and programs, the establishment of interdisciplinary research centers, and the cultivation of world-class scientists, engineers, technicians, and skilled workers.

4. Deepening Structural Reforms
The fourth priority task concerns reform across key domains. The central emphasis here falls on the unified national market, the suppression of monopolistic practices and unfair competition, the regulation of local government investment activity, the revision of incentive structures associated with tax preferences and subsidies, the reform of public procurement, factor market reform, and the reduction of logistics costs. In the financial domain, the government pledges to deepen fiscal, tax, and capital market reforms, expand the share of direct and equity financing, strengthen investor protection, and continue the consolidation of weak regional financial institutions. Simultaneously, Beijing formally reaffirms its support for both the state-owned and non-state sectors, promising to calibrate the regulatory framework to conform with the Law on Promoting the Private Economy, reduce overdue payments to businesses, and improve the overall business environment.

5. High-Standard Opening-Up
The fifth priority task involves not closure, but regulated aperture. China pledges to expand market access — particularly in the services sector — to deepen liberalization in value-added telecommunications, biotechnology, wholly foreign-owned hospitals, and the digital domain, to reduce the negative list for cross-border trade in services, and to advance agreements on the digital economy and CPTPP accession. Concurrently, Beijing intends to sustain the volume of foreign trade while improving its composition, promote the international use of the renminbi, develop cross-border e-commerce and overseas warehousing, advance digital and green trade, expand imports, and improve the regulatory environment for cross-border operations. In the investment sphere, China promises to strengthen services for foreign-invested enterprises and incentivize their reinvestment within the country. Within the Belt and Road framework, the emphasis falls both on large-scale flagship projects and on "small but beautiful" projects oriented toward public welfare, as well as on the development of China–Europe and China–Asia railway corridors, intelligent customs systems, and new forms of international practical cooperation.

Gulnara Safarli
[Continued in Part III]

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