China’s 15th 5 Year Plan: Towards a New Productive Development Model?
This article was originally published in Italian on Class on 24th Sep 2025.
Please note that this is a courtesy translation of the Italian language article originally published on Class Issue at: https://www.classxhsilkroad.it/news/politica-economica/quale-sviluppo-per-la-cina-al-2030-ecco-i-problemi-aperti-202509241228309226
With China now in the preparatory phase of the 15th Five-year Plan (15FYP) (2026–2030), the European Chamber is releasing its annual Position Paper, its most crucial advocacy document, offering 1,141 detailed and constructive recommendations to Chinese policymakers developed by its membership of over 1,600 companies organized into 51 working groups, sub-working groups, industry desks and forums.
The last five years have been marked by milestone events such as Covid-19 or the Russian aggression of Ukraine, which had significant impact on the global world order. At the same time, China’s 14th Year Plan (YP) also provided significant changes. Let’s dive into it.
Breaking with the tradition of previous five-year plans, the 14FYP did not include an explicit growth target, an acknowledgement from Beijing of the reality that maintaining the kind of breakneck growth that China enjoyed in the previous two decades is neither realistic nor that important for a maturing economy.
The 14FYP also reflected China’s desire to increase its overall level of self-reliance to mitigate the impact that external shocks and geopolitical tensions could have on its economic security. This was reinforced by the ‘dual circulation’ policy i.e., spurring domestic demand while developing conditions to facilitate foreign investment and boost production for exports. which has profound implications for business both in China and globally. For the internal part, the country’s emphasis on self-reliance and developing indigenous technologies has seen the playing field sometimes being strongly tilted in favor of domestic players. The external part saw China’s pivotal role in global supply chains strengthening while decreasing its dependencies on external markets; indeed, China’s share of global container exports rose from 32 per cent in 2019 to 34 per cent in 2023, and is estimated to have reached 36 per cent in 2024.
Based on this assessment, what to expect from the 155YP? Information is scarce, with only some broader themes shared by state media. However, European businesses already have some key recommendations that, if implemented, could help spur China’s development and attract more FDI.
1. Address Underlying Structural Issues
China’s economic slowdown has been the Chamber’s top concern for three years in a row. While consumption in China is actually growing, a core issue—as previously mentioned—is that manufacturing output has grown faster; from January to August 2025, Retail sales went up 4.6% y-o-y (a respectable number higher than most European countries) but the industrial production went up 6.2% y-o-y. ‘Involution’, expanding inventories, pressure on profit margins, decreasing asset utilization and pressure to export are all natural consequences of this mismatch. Hence, the Chamber recommends to shift the focus towards supporting the demand side rather than the supply side of China’s economy. While addressing several structural issues—such as an insufficient social security system, which leads to high costs for housing, and child- and elderly care—is a relatively long-term solution for stabilising demand, increasing people’s incomes could be a first, more immediate, step towards addressing sluggish consumption.
2. Allow market places to be more determinant in resource allocation
At the Third Plenum of the Central Committee of the Chinese Communist Party, held in July 2024, the pledge to give the decisive role to market forces in resource allocation was reiterated. However, over the intervening 12 years, there has been a renewed advance, and support for, state-owned enterprises (SOEs), to the disadvantage of many companies in the private sector. This is not only seemingly at odds with the call for the market to play the decisive role, but also detrimental to China’s plan to increase overall productivity, as private firms are consistently ahead of their state-owned counterparts in terms of using capital productively. A positive development in 2025 was the introduction of China’s first law aimed at providing support for the private sector. While advancing development in key, strategic areas is a reasonable goal, a balanced approach would help to avoid targeted segments becoming saturated and precipitating unsustainable competition among market participants. While China’s leadership has already acknowledged the issue of “disorderly competition at low prices”, concrete steps to address the situation have been lagging.
3. Create Equitable Trade Relationships
China’s reliance on exports as a driver of economic growth has intensified, exacerbating the trade imbalances that China has with many of its key partners, which has led to many of them taking various actions in a bid to bring about a more equitable trade relationship. With the US tariffs, there were some expectations that trade tensions with the US could push the EU and China closer together. However, while EU officials did signal an intent to strengthen relations with China, this was always caveated with the fact that long-standing issues still need to be addressed and that the relationship needs to be “fairer and more balanced”.
These questions are increasingly being asked: with an ever-growing trade deficit, as imports from China continue to grow rapidly while exports to China continue to decline, what’s in it for Europe?; and if the benefits of EU-China trade are no longer being equitably distributed, should Europe remain as open to imports from China as it is today?
4. Continue to green the economy
China intends to peak carbon emissions before 2030, and the country has already made rapid progress in its green energy transition, both in terms of renewable energy investments and capacity expansion: China maintained its position as a global leader in energy transition investment in 2024, accounting for 39 per cent of the global total and two thirds of the global increase. The 14FYP had placed significant importance on energy and climate change, which was reflected in the number of indicators on economic and social development devoted to these areas.
The challenge ahead, according to expert analysis, is that China is at risk of missing its emissions intensity reduction targets as its transition from a high- to a low-carbon economy is being kept in check by the challenge of transitioning its economic growth model. A key obstacle is that energy demand is rising faster than the pace at which renewables are being integrated into the energy supply. As European companies are compelled by various factors outside of China’s own sustainability drive to pursue carbon neutrality they are well-placed to drive China’s green transition in multiple areas.
5. Advance China’s digital transition in an inclusive way
China has been building its cyber- and data-security framework for almost a decade, with key legislation having been enacted at the start of the period covered by the 14FYP. The trend of increased digitalization combined with a rising number of related regulations puts additional pressure on MNCs because—unlike their domestic competitors—they are obliged to share various types of data with their overseas headquarters (HQs). While it may seem intuitive that China’s digitalization would create opportunities for foreign companies in the ICT industry, the reality is that their market access has been increasingly restricted. For example, although European firms were instrumental in the early stages of mobile network development in China, their market share dropped from around 30 per cent in the deployment of fourth generation (4G) network technology, to low single digits with the rollout of China’s fifth generation (5G) network technology in 2023. While industrial policy support for indigenous industries is understandable within reasonable and proportionate limits, commercial markets must be free from undue localization mandates. Ensuring market access by giving all companies fair and equal opportunities to fully contribute to market development is also crucial to maintaining and further promoting vital interdependencies.
The plan is expected to be approved at the next plenum of the Chinese Communist Party’s Central Committee, set for October 2025, and then released during the subsequent Two Sessions, which is to take place in March 2026.
With its 1141 recommendations, the European Chamber provides a comprehensive framework to Chinese authorities to address these issues, and create a favorable business environment beneficial to both European companies and China. By: Avv. Carlo D’Andrea, National Vice President of the European Union Chamber of Commerce in China and Chairman of the Board of the Shanghai Chapter, Founder and Managing Partner of D’Andrea & Partners Legal Counsel
By: Avv. Carlo D’Andrea, National Vice President of the European Union Chamber of Commerce in China and Chairman of the Board of the Shanghai Chapter, Founder and Managing Partner of D’Andrea & Partners Legal Counsel
