What China’s latest economic plans say about its technology ambitions and rivalry with the US

Beijing — Two major economic plans unveiled at the annual meeting of China’s legislature outline major priorities that have distinct ramifications for the global economy.

In the 2026 Government Scheme, no. 1 task is to “build a robust domestic market.” Then accelerates technological progress. But the long-term, next five-year plan places great importance on making advances in technology.

The subtle difference highlights the government’s balancing act. Its main aim is to transform from low-cost manufacturing to a technology-driven economy.

But a more immediate concern is dealing with a prolonged slowdown that has depressed consumer and business confidence. China is such a large exporter that the choices it makes affect countries and jobs around the world.

The plans presented at the recent inauguration of the National People’s Congress provide a window into the government’s thinking. The rubber-stamp legislature is set to formally ratify them at the end of an eight-day session on Thursday.

Analysts believe technological prowess is an increasingly important goal for Chinese leader Xi Jinping and his vision to build the nation as a major power to contend with the United States on issues ranging from trade to Taiwan tensions.

Speaking to the provincial delegation at the National People’s Congress, Xi called for new breakthroughs, original inventions and “seizing the top position of science and technology strategy”.

China’s rapid growth as the world’s second largest economy has elevated it to the status of a middle-income country. To move forward, Xi has promoted policies that move the economy toward higher-value industries.

A government-backed push for electric vehicles, for example, has turned China into an emerging player in the global auto industry, while dovetailing with national climate goals.

The five-year plan pledges to “target the frontiers of science and technology”, accelerating development in areas such as artificial intelligence, quantum technology, biotechnology and new energy.

The push has expanded and morphed as the technology has evolved into an arena of competition with the US, with national security implications.

The US has blocked Chinese companies’ access to cutting-edge technologies, including semiconductors that drive AI. The justification is that these parts can be rolled into weapons at a time when the two countries are military rivals.

The Chinese government has responded by pouring resources into engineering methods to develop these units themselves and remain competitive with less advanced parts.

The five-year plan said China should “fight for key technologies”. Specific goals, aside from AI, electric vehicles and robotics, include making advances in semiconductors, batteries, biomedicine and 6G mobile networks.

The project pledged to expand production of China’s indigenous passenger jet, the C919, and make progress in developing its own commercial jet engine. The US temporarily suspended supplies of Western-supplied engines for the C919 amid an escalation in the trade war with China last year.

Rare earths – where China is the global leader – have been highlighted as an area where it needs to maintain its competitive edge as the US and other countries seek to develop their own supplies of critical elements for many advanced tech and military products.

Even as China’s economy cools at home, rising exports have helped it grow overall. But tariffs imposed by US President Donald Trump have exposed the dangers of over-reliance on overseas markets.

China has been able to shift exports to other markets, but it faces challenges as its record trade surplus of $1.2 trillion raises concerns about threats to factory jobs and broader economies in other countries.

This has fueled China’s push to boost consumer spending so the economy is less dependent on outside forces.

“Faced with a complex and challenging international environment, we must commit to a strategy of expanding domestic demand,” the annual economic plan said.

But for all the strong talk, analysts say the effort seems aimed at keeping the economy afloat rather than stimulating it. The annual plan sets a growth target of 4.5% to 5% for 2026, allowing for a decline from last year’s 5% rise.

Meanwhile, analysts say the government is primed to provide massive subsidies for high-tech advances in manufacturing.

“Technological development and self-reliance remain a central priority and industrial policy will be deployed as an essential tool to achieve them,” economists at Capital Economics wrote in a research note.

Similar subsidies to the wind and solar industries led to an oversupply of output that was exported at rock-bottom prices, undercutting overseas competitors. The end result could be an even greater imbalance between China’s vast manufacturing capacity and its weak domestic demand, further driving up its exports.

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Chan Ho-him reports from Hong Kong.