Weekly Update - China : a new year, unchanged priorities

On the occasion of the Chinese New Year, China is preparing to adopt its 15th five-year plan in early March, presented at the plenum last October. Like the previous ones, this plan will serve as a strategic framework for the next five years, setting the country's economic and social orientations. It is a continuation of the "dual circulation" strategy, which aims to reduce dependence on international markets while strengthening domestic demand.

Technological upgrade. The first major direction of the plan concerns the acceleration of China's technological autonomy. The country already benefits from a dense innovation ecosystem, capable of rapidly developing and replicating foreign technologies, at a cost that is about 30% lower. In addition, R&D spending now stands at nearly 96% of the U.S. level, up from 72% a decade ago, driving the country's rapid progress in cutting-edge sectors.
The plan is expected to strengthen support for industries deemed strategic: semiconductors, artificial intelligence, biotechnology and quantum technologies. At the same time, the AI Plus initiative, which aims to integrate artificial intelligence into the entire productive fabric, should receive additional support.
This orientation extends the logic of the Made in China 2025 plan, which aimed to position China in high value-added industries.

Autonomy and resilience of industrial value chains. The second priority of the plan concerns the strengthening of national security in its economic, technological and industrial dimensions. The strength of the Chinese model remains its export capacity. In 2025, the trade surplus reached a record level, exceeding $1,200 billion (6% of GDP).  China produces 30% of the world's manufactured goods, with a clear move upmarket in its production, and consumes only about 18%. In response, various regions are implementing protectionist policies to control Chinese competition, in turn encouraging Beijing to strengthen its production autonomy.

Rebalancing growth towards domestic demand.
Finally, the plan emphasizes rebalancing growth, with the goal of bringing China's GDP per capita closer to that of advanced economies by 2035. The Chinese economy remains at two speeds: while industry and exports remain very dynamic, domestic consumption remains weak.
The factors weighing on demand are both cyclical – the 2021 real estate crisis and the deflationary context that is affecting household confidence – but also structural. Indeed, the lack of social security coverage and the rapid ageing of the population are leading households to save heavily, around 36% of disposable income in 2024.

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