![\"People](\"https:\/\/www.newsbeep.com\/il\/wp-content\/uploads\/2025\/10\/304344.JPG\" "\\"People")
<\/p>\nSINGAPORE, Oct 16 \u2014 China\u2019s Communist Party meets this month to map a five-year vision that prioritises high-tech manufacturing in its quest to upgrade its sprawling industries and project global power as its rivalry with the US intensifies, analysts say.<\/p>\n
Known as a plenum, the meeting is also likely to pledge strong measures to lift household consumption and curb deep, historical supply-demand imbalances that threaten long-term growth in the world\u2019s second-largest economy.<\/p>\n
The two goals are decades old and pull in opposite directions, a policy challenge that has become acute now with US-China tensions worsening, making it hard for Beijing to pivot to demand-side policies, analysts say.<\/p>\n
Industrial prowess demands maintaining the status quo of channelling state resources to producers, while boosting consumption requires funds be redirected to households, leaving less for business and government investment.<\/p>\n
Factories vs consumers<\/p>\n
China\u2019s growth over the past decade was driven by the pursuit of the first goal at the expense of the second. But this action is now fanning deflationary pressures and creating unsustainable debts.<\/p>\n
The intensifying rivalry between the US and China, underlined by US President Donald Trump\u2019s renewed threats of triple-digit tariffs last week, has complicated matters for policymakers in Beijing, analysts say.<\/p>\n
<\/p>\n
People shop at a wet market in Shanghai, China, on July 10, 2025, as captured in this file photo. \u2014 Reuters pic<\/p>\n
It\u2019s a choice to prioritise great power competition over the compelling need to address domestic growth imbalances.<\/p>\n
China\u2019s next five-year plan, the closely watched policy document that the October 20-23 plenum will produce for parliamentary approval in March, will \u201cdefinitely emphasise, and re-emphasise, support for high-tech research and industrial development,\u201d said Chen Bo, senior research fellow at the National University of Singapore\u2019s East Asian Institute.<\/p>\n
\u201cIn terms of a country\u2019s hard power, manufacturing is still a top priority,\u201d Chen said. \u201cWhen conflict arises, what ultimately matters is manufacturing, not services.\u201d<\/p>\n
A speech by President Xi Jinping published by Communist Party magazine Qiushi in July said the world was going through changes not seen in a century, which made \u201ctechnological revolution and major-country competition increasingly intertwined.\u201d<\/p>\n
Xi called on the nation to secure the \u201cstrategic high ground\u201d in the global tech race.<\/p>\n
China now leads in industries such as electric vehicles, solar or wind and is leveraging its dominance of rare earths production with export controls before potential trade talks between Trump and Xi later in October.<\/p>\n
Apart from a few high-end sectors, such as aircraft or advanced semiconductors, its supply chains are largely domestic.<\/p>\n
With the West aiming to re-industrialise and re-arm after Russia\u2019s invasion of Ukraine and amid growing tensions over Taiwan and the South China Sea, the stakes are too high for Beijing to even contemplate slowing down on that front.<\/p>\n
\u201cIf you do not develop high-end industries, you will be subject to others in the future,\u201d said Guo Tianyong, professor at the Central University of Finance and Economics in Beijing, warning, however, that China needed a better policy balance.<\/p>\n
![\"Chinese](\"https:\/\/www.newsbeep.com\/il\/wp-content\/uploads\/2025\/10\/304345.JPG\" "\\"Chinese")
<\/p>\n
Chinese President Xi Jinping speaks during a meeting with Sri Lanka\u2019s Prime Minister Harini Amarasuriya at the Great Hall of the People in Beijing, China, on October 14, 2025. \u2014 Reuters pic<\/p>\n
Cracks are emerging<\/p>\n
Morgan Stanley analysts said they expect post-plenum statements to deliver a \u201ctech- and supply-driven framework, with incremental focus on social welfare.\u201d<\/p>\n
Consequently, \u201cdecisive reflation remains elusive in 2026,\u201d they added.<\/p>\n
Beneath the envy-worthy headline growth, the past five-year cycle has been anything but smooth sailing for the economy \u2013 factory gate deflation is becoming entrenched, adding to a property crisis, a municipal debt scare, endemic industrial overcapacity, and record youth unemployment.<\/p>\n
A generation who studied for highly skilled and well-paid service sector jobs, which a consumption-driven growth model had better chances of creating, faces limited opportunities.<\/p>\n
\u201cIf you only rely on external demand and domestic demand is not working, then you will have unemployment problems and also deflation,\u201d said Larry Hu, chief China economist at Macquarie.<\/p>\n
\u201cIf it continues like this for one or two years, it\u2019s still okay. But in the long run, it will definitely be a problem.\u201d<\/p>\n
Hu expects China to get serious about stimulating consumption if and when external demand shrinks enough to threaten growth targets.<\/p>\n
Empty promises on consumption?<\/p>\n
The 2026-2030 blueprint will be China\u2019s 15th five-year plan since it adopted Soviet-style quinquennial policy formulation cycles in the 1950s.<\/p>\n
The 14th promised to \u201cfully leverage the fundamental role of consumption in stimulating economic development.\u201d The 13th pledged that \u201cthe contribution of consumption to economic growth will continue to grow.\u201d<\/p>\n
Yet Chinese households \u2013 their wealth eroded by the property crisis and confidence shattered by strict pandemic curbs \u2013 still prefer saving over spending, prompting calls to reform labour markets, taxes, state firms, land rights and welfare.<\/p>\n
Analysts say China can muddle along with its contradictory goals by tilting industrial support toward tech research and away from capacity expansion, while gradually building on its incipient efforts to strengthen the welfare system.<\/p>\n
Over the past year, Beijing has rolled out consumer goods subsidies, childcare benefits, and small pension increases. A recent top court ruling that makes social insurance contributions mandatory for both employers and workers lays the groundwork for stronger welfare over the longer term.<\/p>\n
One policy adviser, asking for anonymity to discuss sensitive topics, said benefits will likely rise further in the next five years, with lower pensions increasing faster than higher ones.<\/p>\n
But improvements \u201cwon\u2019t be particularly substantial,\u201d even though \u201ceveryone recognises the issue of insufficient demand,\u201d the adviser said, adding that the small social security budget and tight local government finances limit policy options.<\/p>\n
After the property sector\u2019s downturn, the adviser added, \u201cwe are unable to find new demand drivers.\u201d<\/p>\n
Dan Wang, China director at Eurasia Group, expects the five-year plan to \u201cfocus more on people\u2019s livelihood, including social security, healthcare systems, and possibly more support and protection for low-income groups.\u201d<\/p>\n
But, she says, such language should \u201cabsolutely not\u201d be read as a paradigm shift.<\/p>\n
\u201cIn a now very typical Marxist country,\u201d Wang said, \u201cit\u2019s all about production.\u201d \u2014 Reuters<\/p>\n","protected":false},"excerpt":{"rendered":"SINGAPORE, Oct 16 \u2014 China\u2019s Communist Party meets this month to map a five-year vision that prioritises high-tech…\n","protected":false},"author":2,"featured_media":77561,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[114,54429,184,54432,54430,54431,85,46,40511,8429],"class_list":{"0":"post-77560","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-china-five-year-plan","10":"tag-economy","11":"tag-global-tech-race","12":"tag-high-tech-manufacturing","13":"tag-household-consumption","14":"tag-il","15":"tag-israel","16":"tag-us-china-tensions","17":"tag-xi-jinping"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/77560","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=77560"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/77560\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/77561"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=77560"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=77560"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=77560"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}