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China’s leadership unveiled the 15th Five-Year Plan (2026–2030) with the annual government work report and budget at the National People’s Congress opening. The plan outlines strategies to strengthen domestic demand and boost technological self-reliance while managing property-sector deleveraging, demographic aging, and a more fragmented global environment.

Growth target

Premier Li Qiang announced China’s 2026 GDP target at 4.5%–5%, slightly below the recent ~5% pace. This moderation provides room to manage property corrections and demographic pressures without debt-heavy stimulus, while remaining aligned with the 2035 goal of a “moderately developed economy.”

The government also targets around 2% consumer inflation, roughly 5.5% urban unemployment, and over 12 million new urban jobs in 2026.

Domestic demand

The 15th FYP accelerates China’s shift from quantity-driven growth to quality-oriented development, aiming to significantly boost consumption by 2030. In 2026, RMB250 bn in ultra-long special sovereign bonds will fund consumer goods trade-in programmes, alongside a RMB100 bn fiscal-financial coordination facility to support domestic demand.

Beyond short-term subsidies, policies focus on structural drivers, with targets for employment, healthcare, and support for children. Eldercare services, particularly in rural areas, will expand, alongside promotion of the silver economy and senior-oriented products.

As per capita GDP reaches US$12,000–14,000, service consumption, currently 52% of Chinese household spending, is expected to rise, with households prioritizing healthcare, culture, travel, and other quality-of-life goods. These measures position domestic demand as a key stabilizer of medium-term growth.

Technology and innovation

Technological self-reliance remains central, reflecting the emphasis on developing “new productive forces.” Policymakers aim to lift value added from core digital economy industries to 12.5% of GDP. Strategy extends beyond R&D spending toward a nationwide mobilization framework linking basic research, industrial policy, and enterprise coordination.

Priority sectors include robotics, artificial intelligence, 6G, quantum technology, semiconductors, brain‑computer interfaces and renewable energy. Semiconductor manufacturing is projected to expand at a 23.7%[1] CAGR through 2028, while the domestic AI investment could reach USD100 bn. The “AI+” initiative aims for over 90% penetration of next-generation smart terminals and AI agents by 2030, positioning the intelligent economy as a structural growth engine.

Beyond competitiveness, productivity gains are essential to offset demographic drag, which could reduce long-term growth by roughly 0.4 ppts annually.

Property

Policymakers reaffirm their commitment to stabilizing the real estate market. City-specific measures will be introduced to manage new project approvals, reduce housing inventory, and improve supply.

The sector remains in prolonged adjustment. New home prices continue to fall year-on-year across major cities, and excess supply stays high despite lower land sales. Shanghai recently eased homebuying rules, with similar steps expected in Beijing and Shenzhen.

While property will likely remain a near-term drag, its structural weight in the economy is gradually declining as capital and policy focus shift toward advanced manufacturing and innovation-driven sectors.

Decarbonisation

China sets to reduce carbon emissions per unit of GDP by around 3.8% in 2026, reaffirming its commitment to steady progress toward its dual-carbon objectives.

Non-fossil energy is projected to reach roughly 27% of primary consumption, while new energy storage capacity is expected to sustain CAGR above 20%. Zero-carbon industries—including green methanol, green hydrogen, and sustainable aviation fuel—will transition from pilot projects to commercial deployment. The green transition thus reinforces industrial upgrading and energy security alongside climate commitments.

Anti-involution

The Plan reinforces anti-involution measures to curb destructive price competition and excess capacity. Early stabilization signs are emerging in solar supply chains and key materials. Firms increasingly prioritize margins over volume expansion.

Industry consolidation favors technologically advanced, large-scale players, while weaker producers exit in an orderly manner. Sustained rationalization could support margin recovery and generate a mild reflationary impulse in 2026, improving overall capital allocation efficiency.

Fiscal and monetary policies

Fiscal policy remains proactive. 2026’s deficit-to-GDP ratio is set at 4%, with a total deficit of RMB5.89 trn. General public budget spending will reach RMB30 trn, up RMB1.27 trn from 2025. RMB1.3 trn in ultra-long special treasury bonds will fund national strategies, security, equipment upgrades, and trade-in programmes, while local government bond issuance remains at RMB4.4 trn.

Sharing the financing burden reduces local off-balance-sheet debt and improves fiscal transparency. With central government debt at 29% of GDP, policymakers retain capacity to stabilize the economy and ensure medium-term sustainability.

Monetary policy remains accommodative and stability‑oriented, with a clear preference for targeted support and coordination with fiscal measures. This combination of proactive fiscal tools and measured monetary easing is expected to steepen the CGB yield curve.

Opening up

China is advancing institutional opening-up to counter external decoupling pressures. Measures include wider market access in services such as telecom, biotech, and foreign hospitals, alongside orderly digital-sector liberalization. The national foreign investment negative list is expected to be further reduced.

During the 15th Five-Year Plan, China aims for breakthroughs in joining the Digital Economy Partnership Agreement and the CPTPP, while pursuing substantive progress in major regional trade agreements and deeper WTO reform participation.

Conclusion

The 15th Five-Year Plan marks a structural shift toward "high-quality development" rather than cyclical stimulus. By prioritizing consumption reform and technological self-reliance, China aims to bolster productivity and resilience. Amid demographic and geopolitical challenges, the plan seeks to secure 2035 modernization goals while proactively mitigating systemic financial risks.

[1] Based on Gartner projection


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