China’s Communist Party is convening for a pivotal four-day meeting, known as the fourth plenum, where approximately 370 members of the central committee, led by President Xi Jinping, will finalize the country’s next five-year plan. This strategic blueprint will guide key economic development and good governance priorities between 2026 and 2030.
The fourth plenum is the fourth of seven annual plenary sessions. These sessions are typically held during the five-year term of the Communist Party’s central committee. China’s leadership is navigating a difficult and complicated economic situation inundated with outside forces. Continued hostility from the current trade war with the United States and deep-seated domestic problems are existential threats that loom large over its future growth.
As the meeting unfolds, leaders will address the challenges stemming from intensified trade tensions that began during former President Trump’s administration. Counterintuitively, despite these external pressures, China’s exports continue to reach historical highs, especially to Southeast Asia and Africa as companies scramble to find new markets. This expansion has played a role in creating frictions between China and U.S. and other trading partners.
While all of this is very encouraging, China still has ambitious targets to extrapolate from, hoping to double the size of its economy by 2035. Xi Jinping wants to make this about China showing the world its ambition for global leadership in important technologies. He will especially emphasize artificial intelligence in his speech.
Recent economic forecasts indicate that China is projected to grow by 4.8% this year, closely aligning with its official target of around 5%. For the country’s youngest workers, challenges are mounting, with an unemployment rate approaching 19% for those between the ages of 16-24. This growing demographic strain is likely to limit China’s economic contributions in the long run.
China is grappling with demographic shifts. In China, the population of 1.4 billion is already on course to begin shrinking. It’s aging faster—which is another complication for the economic development chess match. The new leadership understands that strengthening consumer demand is crucial for economic growth. Confidence in the market remains shaky due to the aftershocks from the previous property bubble bursting.
Yet Xi’s administration is doing all it can to quickly achieve technological self-sufficiency. They want to reduce reliance on cutting-edge semiconductors from the United States as export controls and tariffs tighten. We expect this meeting to drill down into these strategies in even more detail.
“Even those who think we can maintain strong economic growth of 4%-5% for the next 10 years do think it will be very difficult. For China’s leadership, what do they care about? Stability, legitimacy, and ongoing support,” noted Ning Zhang, a senior China economist at UBS.
As this plenum unfolds, participants will be having several conversations. They’ll discuss how to increase domestic consumption and incentivize investment in advanced technology. Wendy Leutert, a professor of economics and trade at Indiana University, commented on the leadership’s priorities: “Overall, China’s leaders still appear willing to accept economic costs, including resource misallocation and failures, in order to pursue self-sufficiency and technological leadership in strategically important industries and strengthen overall national power.”
Photo: The National People’s Congress will meet in March. That’s when they’re required to publicly announce the final specifics of their five-year plan.
