By Majid Ghorbani

As China’s Two Sessions conclude and the country’s 15th Five-Year Plan comes into focus, what does the country’s new development blueprint signal for businesses and investors?

In this article, CEIBS Associate Professor of Management Practice and Deputy Director of Global MiM CEIBS (Switzerland)-ESCP Double Degree Programme Majid Ghorbani examines the key continuities and shifts in the plan, and explores what they reveal about China’s pursuit of high-quality growth in the years ahead.

Introduction

The most recent session of China’s National People’s Congress (NPC) and its formal approval of the country’s 15th Five Year Plan reaffirmed the central role of these plans in shaping national priorities and guiding the allocation of public resources. Beyond outlining the government’s administrative agenda, Five-Year Plans influence the flow of public funds, bank lending, and regulatory support across all levels of the economy. They also create a policy environment that encourages private firms, research institutes, universities, and foreign enterprises to align their strategies with national objectives.

As such, these Plans function not merely as bureaucratic blueprints but as signals of China’s evolving developmental trajectory. While many themes persist across consecutive plans, each new one marks the continuation, adjustment, or conclusion of earlier priorities and introduces new areas of emphasis. This article highlights the major continuities and shifts within the 15th Five-Year Plan and assesses the implications for both international and domestic enterprises.

Major Continuities: What has stayed the same?

Economic Growth and Social Wellbeing

The Plan reaffirms China’s commitment to stable economic development, targeting 4.5%–5% GDP growth alongside improvements in social welfare and living standards. The plan continues to emphasise the construction of a “harmonious civilisation” through urbanisation, public service expansion, and social governance reforms.

Environmental Sustainability and Carbon Reduction

Environmental sustainability remains a central pillar. The plan reiterates China’s long term goals for reducing carbon emissions per unit of GDP and expanding green energy capacity. Although the targets are ambitious, the absence of a clear pathway for phasing out coal underscores the tension between economic security and environmental responsibility.

Central Role of the Party in Governance

The Plan maintains the Party’s central role in steering economic and social development. This includes strengthening policy coordination, enhancing regulatory oversight, and ensuring ideological alignment across institutions and industries.

Reform and Opening Up

Despite rising geopolitical tensions, the plan reiterates China’s stated commitment to reform and opening up. Notable initiatives include more accommodative monetary policies, pilot programmes for foreign owned hospitals, and expanded access for foreign investment in value added biotechnology and telecommunications. While these reforms may initially benefit higher income groups, the long term diffusion of advanced technologies could lead to broader societal benefits.

Significant Shifts: What has changed?

Technological Self-reliance and Strategic Resilience

The most pronounced shift in the Plan is the renewed emphasis on technological self reliance. Key sectors—advanced manufacturing, biotechnology, green energy, artificial intelligence, quantum computing, and low altitude aviation—are prioritised for accelerated development. Although the plan encourages international collaboration and foreign investment, the overarching objective is to reduce dependence on foreign technologies and mitigate vulnerabilities to sanctions or supply chain disruptions.

Changing Composition of Expatriate Talent

Following the pandemic induced decline in foreign visitors and residents, China has eased visa requirements and expanded visa free entry for many nationalities. Tourist and business travel rebounded to pre pandemic levels in 2025, yet the expatriate population has not fully recovered. The new Plan suggests a shift in the types of foreign talent China seeks to attract fewer Western executives in senior management roles and more technical specialists in STEM (Science, Technology, Engineering, and Mathematics) fields, particularly AI, quantum computing, telecommunications, aerospace, and biotechnology.

Reframing the Double Circulation Strategy

The concept of double circulation—strengthening domestic demand while integrating with global markets—was a major theme of the 14th Five-Year Plan. In the new Plan, this emphasis is noticeably reduced and reframed. The government now stresses innovation driven upgrading rather than relying on low cost production for domestic and international markets. This shift responds to the destructive competition (neijuan, 内卷) that emerged as firms competed primarily on cost, often leading to oversupply and the export of low quality goods. The new Plan signals a desire to move Chinese enterprises up the value chain and compete globally on quality and technological sophistication rather than price alone.

Areas of Ambiguity and Policy Gaps

Innovation Targets Without Clear Implementation Pathways

Although the Plan calls for a 7.1% increase in science and technology investment, it remains vague on how innovation will be translated into industrial upgrading. The pursuit of technological self reliance may risk isolating China from global knowledge networks, potentially slowing the diffusion of cutting edge research into commercial applications. Moreover, the transition from scientific discovery to high quality production is not automatic and requires institutional mechanisms that the FYP does not fully articulate.

A more effective innovation ecosystem would require stronger collaboration between the public and private sectors, including coordinated research agendas, shared testing facilities, and joint commercialisation platforms. China’s universities and research institutes already play a central role in basic research, but deeper integration with enterprises—through co funded laboratories, joint doctoral training, and industry embedded research teams—would help accelerate the translation of scientific advances into marketable technologies.

China’s innovation capacity would also benefit from greater internationalisation of education, research, and knowledge creation. Expanding joint research programmes with foreign universities, establishing cross border innovation hubs, and developing dual degree or joint degree programmes at all tertiary levels would strengthen China’s participation in global scientific networks and mitigate the risks of technological isolation.

Industrial Policies to Curb Low Quality Exports

To address destructive competition and improve global competitiveness, China could consider restricting the export of low quality goods priced below market levels. Similar policies have been implemented in the construction sector, where below cost bidding and substandard materials were penalized. Extending such measures to manufacturing could incentivise firms to improve product quality and reduce the proliferation of ultra low cost exports.

Talent and Residency Policy Gaps

The shift toward attracting more technical specialists in STEM fields highlights the need for reforms to expatriate and international student residency policies. Current rules require visas and residency permits to expire immediately upon the end of employment or study, leaving no transition period. Granting a grace period of several months to one year would help retain skilled individuals and facilitate their absorption into domestic enterprises and research institutions. Moreover, implementing policies that facilitate spousal employment and provide children with access to affordable education and work permits can entice more expatriates to move to China and foster a sense of loyalty to their new “home”.

Environmental Commitments and Geopolitical Uncertainty

The 15th Five-Year Plan pledges a cumulative 17% reduction in carbon intensity, reinforcing China’s role as the world’s largest investor in green energy. However, coal remains the dominant energy source, and the plan does not outline a clear phase out strategy. With the United States and several European countries scaling back their climate commitments, international attention is focused on whether China will maintain its targets—especially amid geopolitical shocks such as the recent US–Israel conflict with Iran and disruptions to Persian Gulf energy exports. These developments raise questions about whether China might revert to expanding coal fired power generation to ensure energy security.

Fiscal and Monetary Constraints

The plan offers limited clarity on fiscal and monetary reforms. Persistent capital flow controls and restrictions on cross border financial transactions remain major obstacles for foreign investors. China’s ambition to internationalise the renminbi and reduce reliance on the US dollar is constrained by current monetary policies, and the Plan provides little indication of imminent change. Given the downturn in the domestic real estate market and rising taxes on foreign asset ownership abroad, new investment channels will be essential for China’s transition to an advanced economy.

Conclusion

The 15th Five-Year Plan overall presents a coherent strategy for sustaining China’s economic growth at 4.5%–5%, strengthening domestic consumption, and upgrading industrial capabilities. While these Plans are inherently high level documents and do not specify implementation mechanisms, the new plan outlines a vision for a more innovative, resilient, and environmentally conscious China.

Its success will depend on the government’s ability to balance self reliance with openness, maintain environmental commitments amid geopolitical uncertainty, and create institutional conditions that support high quality growth. If effectively implemented, the Plan has the potential to deliver meaningful benefits for China and contribute positively to global economic development.

Majid Ghorbani is an Associate Professor of Management Practice and Deputy Director of Global MiM CEIBS (Switzerland)-ESCP Double Degree Programme at CEIBS. His research interests mostly focus on the influence of government, policy and political systems on corporate social responsibility, and innovation and entrepreneurship strategies.