China's Communist Party leadership, led by President Xi Jinping, gathers in Beijing starting Monday for the secretive fourth plenum, a four-day closed-door session to finalize the 2026-2030 five-year plan. With approximately 370 central committee members in attendance, this high-stakes meeting aims to unify the party and the public behind Xi's vision amid intensifying trade tensions with the United States and looming domestic challenges. The plenum, the fourth of seven sessions in the party's five-year term, may also signal significant personnel reshuffles, though details may emerge only days or weeks later due to the opaque nature of the proceedings.
The timing is critical, with U.S.-China trade frictions escalating under President Donald Trump's tightened export controls and tariffs, and a potential Xi-Trump meeting on the horizon at a regional summit later this month. China's economy, projected to grow at 4.8% this year—close to the government's 5% target, according to the World Bank—faces headwinds from both external pressures and internal structural issues. These include a prolonged property sector downturn, chronic overcapacity in industries like automotive, and a demographic crisis marked by a shrinking and aging population of 1.4 billion.
The five-year plan, while not fully unveiled until the National People's Congress in March 2026, is expected to maintain continuity with past strategies, emphasizing technological "self-sufficiency" and economic stability, says Lynn Song, chief economist for Greater China at ING Bank. Xi's push to position China as a global leader in artificial intelligence, semiconductors, and other advanced technologies is accelerating as U.S. restrictions on chip exports tighten. "Expect increased investment in R&D to counter these constraints," predicts Ning Zhang, senior China economist at UBS, highlighting Beijing's drive to reduce reliance on Western technology.
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Boosting domestic consumption remains a top priority but a persistent challenge. The property market collapse has eroded consumer confidence, leading to reduced household spending and increased savings. Despite incremental government measures—such as subsidies for childcare, consumer loans, and trade-in programs for appliances and electric vehicles—economists like Leah Fahy of Capital Economics argue that bolder reforms are needed to stimulate demand effectively. "Consumption is more critical than ever, but the leadership's cautious approach limits impact," Fahy notes.
Overcapacity in industries like automotive has sparked aggressive price wars, pushing Chinese firms to flood markets in Southeast Asia and Africa with exports, further straining relations with trading partners. The post-COVID recovery has been uneven, with massive layoffs in the property sector and a youth unemployment rate nearing 19% for those aged 16-24, according to official data. These factors, combined with underinvestment in social sectors like healthcare, education, and elder care, hinder efforts to rebalance the economy, warns Wendy Leutert, a professor of economics and trade at Indiana University.
Despite these hurdles, China's leadership remains focused on ambitious long-term goals, including doubling the 2020 GDP by 2035—a target tied to the party's legitimacy and its promise of a better quality of life. "Stability, legitimacy, and ongoing public support are what drive the leadership," Zhang of UBS emphasizes. The plenum serves as a platform to project confidence in achieving these goals, even as sustaining 4-5% annual growth over the next decade appears "challenging," he adds.
The leadership's commitment to "national power" through technological leadership and industrial self-reliance may come at the cost of resource misallocation, Leutert cautions. Yet, for Xi and the Communist Party, the plenum is a chance to reinforce their narrative of resilience and progress, rallying the nation behind a vision of enduring strength in a turbulent global landscape. As the world watches, the decisions made in Beijing this week could shape China's economic and geopolitical trajectory for years to come.
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