As China concluded its annual National People’s Congress (NPC) this week, the world beyond Beijing’s Great Hall of the People looks unusually unsettled. War and instability in the Middle East are rattling global energy markets and supply chains. And geopolitical rivalries between China and the United States are sharpening competition over technology, minerals and trade.
Judging from Chinese Premier Li Qiang’s Government Work Report delivered on 5 March, and the latest executive summary of its Five Year Plan, China’s top leadership is sending a clear signal: economic resilience and technological self-reliance are not temporary responses to pressure but long-term strategic choices.
For Beijing, the logic behind this approach is straightforward. Over the past decade, Chinese policymakers have become increasingly convinced that globalization – once the engine of the country’s meteoric growth – is becoming a source of vulnerability.
Conflicts, geopolitical rivalry and the COVID-19 pandemic have exposed the fragility of global supply networks. And intensifying technology restrictions by advanced economies have underscored how dependence on foreign inputs can constrain national development.
The turmoil in the Gulf will only reinforce Beijing’s conviction. Instability in several of the world’s most important energy suppliers illustrates how quickly geopolitical crises can ripple through global markets. For a country like China, which remains the world’s largest energy importer and a central hub in global manufacturing networks, the war is a stark reminder of the risks inherent in overreliance on external conditions beyond its control.
In that sense, the leadership believes its pivot toward resilience was both prescient and necessary. Policies aimed at strengthening domestic supply chains, boosting advanced manufacturing, and investing heavily in strategic technologies – from semiconductors and 6G connectivity to artificial intelligence – are framed not merely as economic initiatives but as pillars of national security.
Some published details of the 15th Five Year Plan – China’s economic blueprint – further underscore this strategic shift. The Plan seemed to offer few surprises and did not catch any global media attention this week. Yet, it showed that Beijing has elevated high-end manufacturing and digital innovation to the centre of its economic agenda.
The work report states that the Chinese government will increase its overall national research and development spending by around 7 per cent in the next five years compared to the period between 2021 and 2025. And it also proposes to make digital economy industries account for 12.5 per cent of the overall GDP in the following five years.
An intelligent technology economy
China’s government is placing stronger emphasis on fundamental breakthroughs in future industries such as brain-computer interfaces, quantum technology and semiconductor supply chains. Meanwhile policymakers are promoting the ‘AI Plus’ initiative – an effort to integrate artificial intelligence across manufacturing, logistics, healthcare, and urbanization.
The ambition is to move China up the value chain, embed intelligent technologies throughout the real economy and create a more productive and technologically autonomous growth model.
Yet resilience has come with heavy trade-offs. China’s economy is no longer expanding at the rapid pace that defined the previous decades. Indeed China has set its growth target at between 4.5 and 5 per cent. That number will make many advanced economies envious. But it is the lowest target since records were published from the 1990s.
Structural adjustments – particularly in the property sector and local government finance – have weighed on growth. Policymakers insist that slower but higher-quality growth is preferable to the debt-driven expansion of the past. But for many Chinese households and businesses, the transition has been uneven. Despite all the state and enterprise investments in high-end manufacturing, some business sectors and consumers still feel the chill of economic slowdown.
Unemployment
Perhaps the most persistent challenge lies in China’s labour market. Youth unemployment, which surged as a result of the pandemic and shrinking service sectors, remains troubling. Can the economy generate opportunities for a highly educated generation entering the workforce?
Even as official statistics fluctuate and measurement methods evolve, the underlying issue is clear. Millions of young graduates are struggling to find jobs that match their skills and expectations.
This dilemma highlights the tension within China’s development strategy. On the one hand, the push toward high-tech industries and strategic manufacturing promises long-term competitiveness. On the other, these sectors are capital-intensive and cannot absorb the vast number of graduates produced each year. The country’s traditional engines of employment – real estate, construction, and low-cost manufacturing – are no longer expanding at the same pace.
Additionally, the latest push to tech self-reliance requires new skillsets in the secondary and tertiary education syllabus.
Addressing this imbalance will require more than technological breakthroughs. It will demand policies that foster a more dynamic private sector, expand service industries, and encourage entrepreneurship among younger workers. Without such adjustments, the promise of resilience could come at the cost of creating a frustrated generation.
Within the Plan’s executive summary, there are strong words to support employment generation, including helping skilled labours to acquire basic AI skills. But it is short on detail.