Xi Jinping is personally involved in China’s new five-year plan

China’s GDP grew by 5.3% year on year over the first half of 2025, helped by manufacturing investment and resilient exports. But consumption is weak

THE JINGXI hotel will contain all the intrigue, as usual. From October 20th to 23rd some 370 of the Communist Party’s top officials will congregate in Beijing to map out the country’s economic course to 2030. The five-year plan they eventually release in March will be the 15th since the party gained power in 1949. Titanic in size, as befits the world’s second-largest economy, it will touch on everything from advanced manufacturing to green development and beyond. Xi Jinping, China’s president, is helping to shape it himself.

Chinese President Xi Jinping.(AP)

The bigwigs meet in tricky circumstances (see chart). China’s GDP grew by 5.3% year on year over the first half of 2025, helped by manufacturing investment and resilient exports. But consumption is weak. Many Chinese tend to save, and they have become more cautious amid an uncertain job market and a savage property downturn. Weak domestic demand is causing deflation—consumer prices fell by 0.4% in August from the same period a year before. It is also adding to trade tensions. China produces some 30% of the world’s manufactured goods but accounts for just 18% of global consumption. A protectionist backlash is building in other countries. And an uneasy truce in the trade war depends upon the mood of Donald Trump, America’s president.

The size of five-year plans, and the opacity of the related planning processes, can make them easy to dismiss. But each offers a precious glimpse into the machinery of China’s top political bodies. Input is sought from academics, economists and other wonks. On this occasion state media have reported that Mr Xi is also considering the opinions of online commenters.

Foreigners have plenty of suggestions, too. Scott Bessent, America’s treasury secretary, has offered his thoughts on how to rebalance the economy towards consumption. Citigroup, an American bank, has outlined measures worth more than 11trn yuan ($1.6trn) over the next five years to support household spending, including broadening access to free pre-schools and more generous health insurance. UBS, another bank, considers how the plan could give a needed boost to services, from caring for the old to getting Chinese people more into sports.

Five-year plans once focused squarely on GDP growth and all the material inputs that entails. Lately, though, they have become more sprawling (the last plan dropped the five-year growth target entirely, though annual GDP targets are still meted out). With so much material, officials tend to focus on the goals that are specific, quantified, or given precedence at the very top of the plan.

What is clear is that China will double down on high-end manufacturing as 2030 approaches. Mr Xi remains enthusiastic about “new-quality productive forces”, as he calls them (although lately he has warned local governments not to champion exactly the same industries so as to avoid duplicative investment). Having conquered electric cars, China has its sights on other futuristic sectors such as humanoid robots and quantum computing. To this end, the plan may lay out goals for everything from spending on industrial research and development to automation in factories. It will probably include a target China has already set to integrate artificial intelligence into 90% of manufacturing by 2030, in the hope of making China’s factories even more productive.

Chart.

A particular focus is likely to be on ending technological “strangleholds”. Chinese companies are working to reduce their reliance on foreign suppliers for advanced semiconductors. They are also trying to eliminate other dependencies, such as for aircraft engines. Officials see them as a vulnerability (America has banned the export of its high-end chips to China since 2022). A report released last month by a group of high-ranking Chinese officials lays out that becoming a sci-tech power is therefore not only economically necessary, but also “the fundamental way” to respond to “containment and suppression by the US and other Western countries”.

Opening their wallets

Efforts to spur consumption will also feature prominently in the plan. The last one vaguely called for “more reliance on the strong domestic market”. The one before that said consumption’s contribution to economic growth should increase but also called for society to embrace “frugality”. This time around, a chorus of establishment economists is calling for stronger stuff, including a numerical target in the plan for consumption as a share of China’s GDP. At the moment that figure is 57% (including state spending on things like running hospitals) compared with 73% for the world. Lu Feng, an economist at Peking University, has called for the plan to raise it by 5-10 percentage points by 2030. Peng Sen, a retired state planner, has suggested a similar hike which could put the share of consumption over 70% by 2035.

This year officials have already tried to boost spending in various ways, from subsidising consumer credit to rolling out trade-in schemes that encourage households to swap their old appliances for new ones. In July the government also started to give parents 3,600 yuan a year for each child under the age of three. But to really boost consumption, the five-year plan would need something more ambitious—a big injection of fiscal resources into China’s social-safety net, say, so that people, especially poorer ones, would worry less about saving for their old age or a prolonged bout of sickness.

Embracing such measures will be more difficult for the party than piling into scientific and technological industries. China’s local governments, which manage its pensions, are already short of cash. The central government has been letting them issue extra bonds to replace their riskiest “hidden” debts, but is reluctant to help further. More important, Mr Xi and much of the party elite dislike what he calls “welfarism”. Overly generous governments create “lazy people” and “inevitably bring about serious economic and political problems”, he warned in 2021. The solution will probably be a compromise of sorts. The plan could call for consumption to rise as a share of GDP but not specify by how much exactly. It may also demand that disposable incomes rise “faster” than GDP growth (rather than “in line with” it, as previous plans have stated).

“Within the realm of politically realistic policies, there’s just not a tonne of tools that they have available,” explains Christopher Beddor of Gavekal Dragonomics, a consultancy. Whatever the sage advice offered by external experts then, the attitudes of the leadership will decide the most important goals of the next five-year plan. And to protect themselves, and the progression of their careers, officials will not include targets that they are not sure of hitting. The main targets of recent five-year plans have almost all been completed, according to research by Mr Beddor, who finds that they also contain fewer “hard” economic targets than in the 1990s. The government puts that down to the plans’ more “scientific and standardised formulation of implementation”. Simultaneously anachronistic and futuristic, they still remain a useful guide to China’s priorities.

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