Beijing: China is set to maintain its production-focused economic strategy even as it faces growing pressure from domestic imbalances and escalating rivalry with the United States, analysts say. The country’s Communist Party convenes this month for a key plenum to shape a five-year vision that emphasizes high-tech manufacturing and global industrial clout, while pledging measures to boost household consumption and address long-standing supply-demand gaps.
Analysts highlight the inherent tension in Beijing’s economic strategy: industrial expansion demands continued state investment in producers, whereas boosting domestic consumption requires redirecting resources toward households. This balancing act has been complicated further by renewed U.S. threats of triple-digit tariffs, leaving policymakers in a bind between securing international competitiveness and addressing domestic growth deficits.
The upcoming five-year plan, to be approved by parliament in March, is expected to double down on high-tech sectors such as electric vehicles, solar and wind energy, and advanced manufacturing. President Xi Jinping has repeatedly stressed the importance of securing the “strategic high ground” in the global technology race, linking technological innovation directly to China’s stature as a major global power.
China’s dominance in sectors like rare earths and key renewable energy technologies gives it leverage in international trade negotiations, but supply chains outside of elite sectors remain largely domestic. Experts warn that while manufacturing remains central to national security and economic strength, China must carefully balance industrial growth with rising deflationary pressures and unsustainable debt levels that have emerged from prioritizing production over consumption.
Despite plans to lift consumer demand, analysts note that domestic consumption growth may remain limited, as Beijing continues to prioritize hard power and industrial prowess in the face of intensifying geopolitical competition with the United States. The plenum, running from October 20-23, is expected to reaffirm China’s commitment to a supply-driven model while cautiously acknowledging the need for broader economic recalibration.