China’s New Five-Year Plan Falls Far Short of the Economy’s Needs

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Nov 3, 2025 - 10:53 Updated: Nov 3, 2025 - 10:49
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China’s New Five-Year Plan Falls Far Short of the Economy’s Needs

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Commentary

Meetings at the Chinese Communist Party’s (CCP’s) so-called Fourth Plenum have given birth to a new five-year plan for the Chinese economy. It promises a great deal: that China will at last become self-sufficient in advanced technologies, that Chinese consumers will find new spending vigor, that Beijing in the future will pay closer attention to supply and demand, that China will gain still more international influence, and that the country will invest more in emerging industries.

Most of this is merely an extension of what Beijing has been doing for some time now, with mixed results at best. Otherwise, the plan says less about specific steps and policies and more about what Beijing would like to happen. It falls far short of what China’s economy needs.

According to a translation of the plan’s Mandarin-language summary, it promises to “adhere to the strategic point of expanding domestic demand” and “vigorously boost consumption.” The planners make clear that China will achieve these goals through investment projects in public services, urban planning, and elderly care, and not with a “bold, direct push to expand consumption itself.”

Apart from such help for the Chinese consumer, the plan reaffirms the years-long goal of achieving self-reliance in advanced technologies, such as quantum computing, electric vehicles, batteries, semiconductor manufacturing, biotechnologies, and hydrogen power.

The tech investment part of the plan is entirely an extension of what China has been doing for the past two years or so. Even if successful, it is hardly enough to move the economy. At last measure, the areas identified for emphasis amount to a mere 3.5 percent of China’s gross domestic product (GDP).

Some of the spending is well placed. China has extreme vulnerabilities in that it produces barely one-fifth of the semiconductors it needs and must import the rest. For the other investments, China had begun building them up in 2023 and has expanded production capacities well beyond China’s domestic needs. This surplus output has made China’s economy even more dependent on exports than it was, and inauspiciously at a time when the United States, the European Union, and several developing countries, such as Mexico, have become increasingly wary of China trade and are raising tariffs to block this avenue for China to unload its surplus production capabilities. The production capacity has already grown so large that excess output has brought the country a destructive deflation. The plan will do nothing but exacerbate these problems.

On the consumer side, this plan seems to promise a surge in spending more than it offers a means to induce it. The property crisis has so depressed real estate prices that, according to calculations by the Foreign Policy Institute and others, Chinese households have lost the equivalent of some $18.1 trillion in net worth. And since, in most cases, the family home constitutes the bulk of a Chinese household’s net worth, real estate losses have all but decimated the Chinese middle class. Little wonder then that Chinese people have become wary of spending. So far, government subsidies for purchases of home appliances and automobiles have failed to overcome this reluctance.

Yet, as already stated, the plan gives households no direct income support. To be sure, the promised increases in urban planning, infrastructure, and elderly care can offer Chinese households some relief, but the extreme net worth setback these households have suffered would seem to demand more robust remedies, a fact to which the failure of the CCP’s programs to boost consumption also testifies.

Remarkably, the plan’s readout omits any effort to address the severe debt overhang under which local governments are suffering. As explained in an earlier column, local governments throughout the country have amassed so much debt that they are having trouble servicing it and, in some cases, even providing basic services to their populations. Beijing has in the past taken some steps to address the problem, but it is by no means near resolution. Yet the new five-year plan seems to have completely ignored it.

Perhaps some relief for China’s beleaguered economy will emerge from the trade talks between U.S. Treasury Secretary Scott Bessant and Chinese Vice Minister He Lifeng held recently in Malaysia and the face-to-face meeting between U.S. President Donald Trump and CCP leader Xi Jinping during the Asia-Pacific Economic Cooperation Summit in South Korea. But the much-anticipated five-year plan offers little about which to become excited.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.
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