From October 20 to 23, the Fourth Plenary Session of the 20th CCP Central Committee was held in Beijing. The meeting reviewed and approved the proposals for formulating the 15th Five-Year Plan, outlining a blueprint for China's development over the next five years. Taking place at a critical juncture on the path toward the goal of basically achieving socialist modernization by 2035, the session's policy signals and strategic adjustments have drawn considerable attention.
At a recent internal seminar, ANBOUND's founder Kung Chan offered an in-depth interpretation of the plenary communiqué and the proposed 15th Five-Year Plan, identifying eight core strategic insights. According to Chea, the plenary session demonstrated a strong sense of bottom-line thinking and a pragmatic approach. Its underlying logic reflects a profound understanding of the complex situations both within China itself as well as in the international environment. Chan focused on the rational adjustment of economic growth targets, the balance in advancing technological self-reliance, the elevated strategic role of domestic demand, particularly consumption, and the far-reaching significance of the CCP's works in driving broader social transformation. His analysis provides key perspectives for understanding China's development trajectory during the 15th Five-Year Plan period and beyond.
(1) China's economic growth target for the 15th Five-Year Plan period needs to be rationally adjusted, with a rate of around 4% being more consistent with current realities. Forecasts by foreign investment banks, which place China's growth between 4.5% and 5% during this period, tend to be overly optimistic. Based on the goal of reaching the level of a "moderately developed country, the realistic growth range should be between 3% and 4%. Through model-based analysis, Chan points out that achieving a per capita GDP of USD 30,000 would require an annual growth rate of 6.97%, which is clearly unrealistic. By contrast, reaching USD 20,000 per capita would only require a growth rate of around 4%, sufficient to meet the target. At present, many local governments in the country still set high growth targets of 7%–8%, which are disconnected from national realities and may render their plans unfeasible. Chan emphasizes that the underlying logic of economic growth is determined by context, i.e., development conditions such as fiscal capacity and the international environment act like the chassis of a car, constraining the maximum speed. Therefore, China needs to consider the "new normal" of moderate to low growth in the future, avoiding blindly pursuing higher growth figures at the expense of systemic stability.
(2) The phrase "momentous and extraordinary" mentioned in the session's communiqué precisely captures the defining characteristics of the current era. The session's use of these terms reflects an objective assessment of the complex and volatile domestic and international situations. From the Russia–Ukraine conflict and upheavals in the Middle East to the COVID-19 pandemic and the U.S.–China trade war, a series of global disruptions has overturned decades of relative stability, creating a deeply uncertain context for China's development. Domestically in China itself, the real estate sector offers a clear example. The long-standing growth model driven by land-based fiscal revenues and developer markups has become unsustainable. The resulting contraction of household wealth and mounting fiscal pressures are the inevitable outcomes of this "unsustainability." Under such conditions, any linear projections, such as simplistic comparisons between the targets of the 14th and 15th Five-Year Plans, are naïve. This also signals that China's future development environment will be highly dynamic. Both policy and markets must adapt to this "new normal" of heightened uncertainty, shifting away from the pursuit of a fixed growth trajectory toward building a resilient system capable of withstanding shocks and change.
(3) China's technological self-reliance and self-strengthening needs to be guided by national security priorities and avoid excessive expansion. Efforts in this area must be strictly confined to strategic sectors essential for safeguarding national security and preventing critical vulnerabilities, rather than pursuing full-scale localization or substitution across entire industrial chains. If the national economy becomes overly tied to an all-encompassing campaign for technological independence, China risks repeating the Soviet Union's mistake of exhausting its economy through excessive military competition which led to declining resource allocation efficiency and surging innovation costs. Under the current geopolitical climate, the traditional model of "global procurement and system integration" has indeed been disrupted. However, the correct response is not to internalize all high-tech production within one country, as this would run counter to basic economic principles. By closely linking technological self-reliance to national security, the Fourth Plenary Session reflects a pragmatic strategic balance by aiming at mitigate major risks through breakthroughs in critical and core technologies, while minimizing unnecessary disruption to normal global industrial cooperation. Accordingly, future policies should focus more on truly vital areas such as semiconductors and aircraft engines, i.e., technologies that directly affect national survival and long-term development. For more general industries, it would be crucial for China to continue upholding openness and international cooperation, leveraging global markets to enhance efficiency. The essence of this approach lies in striking a difficult but essential balance between ensuring security and maintaining openness and efficiency.
(4) The cycle of new demand and new supply is the core pathway to expanding China's domestic demand. The Fourth Plenary Session's concept of "leading new supply with new demand, and creating new demand through new supply" resolves the debate over whether investment or consumption is more important. In the past, investment was emphasized as a driver, but in the future, investment must be anchored in consumer demand. For instance, innovations like new energy vehicles and 5G technology stimulate consumer potential, while the upgrading of consumption further guides industrial investment. This cycle breaks the traditional one-way logic of "investment—production", defining "effective investment" as investment that can be absorbed by the market and form a virtuous cycle. At the same time, policies clearly state that the "internal driving force and reliability of the domestic cycle" is the basis, as increasing uncertainties in the international cycle require reliance on the stability and resilience of domestic demand.
(5) The Fourth Plenary Session elevated consumption to the level of a "strategic cornerstone," signaling its significance has even surpassed that of national defense and infrastructure. With China's household consumption scale reaching the trillion-yuan level and the country entering a post-industrial, stock-based economy era, the space for investment-driven growth has narrowed, making consumption the only viable source of incremental growth. This shift requires policies to move from a "production-oriented" focus to a "demand-oriented" approach, such as incentivizing local governments to stimulate consumption through tax reforms. As a result, the outdated economic thinking of "revolution-driven production" from the era of scarcity is no longer relevant. Going forward, the focus will be on activating existing resources through consumption upgrades, forming a virtuous cycle of "economic development—improvement of people's livelihoods".
(6) Private economy and regional growth hubs in China have a critical role to play. Although the Fourth Plenary Session did not extensively focus on the private economy, the phrase "stimulating the vitality of all market entities" implicitly highlights the importance of private enterprises. Kung Chan categorizes China's economic forces into four types: the "central entities" (state-owned enterprises), the "regular entities" (state-owned enterprises in Shanghai), the "local entities" (private enterprises in Jiangsu and Zhejiang), and the "veteran entities" (enterprises in Guangdong and Shenzhen Special Economic Zone). He predicts that future growth will largely depend on the "local entities" and "veteran entities" due to their greater flexibility and innovation capacity. At the same time, the call to "promote coordinated regional development" suggests that developed coastal areas must bear the responsibility for driving growth. This can be achieved through technology spillovers and industrial transfers, helping to activate the national market.
(7) A crucial point is the shift in urbanization from scale expansion to "people-centered" urban renewal. "People-centered new-type urbanization" is a key shift outlined in the Fourth Plenary Session, with the core focus on urban renewal rather than the construction of new districts. During the previous phase of urban development, the "density and floor area ratio" model in shaping the urban area was not fully utilized. Urban construction was overly focused on economic growth, which led to issues like traffic congestion and urban flooding. Hence, there should be a reduction in reliance on land finance, with an emphasis on improving the quality of urban life. For example, limiting the construction of ultra-high-rise buildings and increasing the availability of public service facilities will make cities more livable. This approach, proposed in the Fourth Plenary Session, aligns with the People-Oriented Development (POD) model suggested by ANBOUND in 2018. The goal is to activate consumption space through urban renewal, moving away from the blind expansion of real estate development.
(8) The Chinese Communist Party's self-reform is one of the most noteworthy ideas from the Fourth Plenary Session, with implications that may extend far beyond the economic sphere and are even included in the 15th Five-Year Plan. This suggests that the current anti-corruption campaign has evolved from internal party discipline into a broader, systemic social transformation, addressing deeper issues such as class structure and interest reorganization. While the Fourth Plenary Session did not list as many specific reform measures as the Third Plenary Session, the concept of a "self-reform" hints at significant policy adjustments in the future. Additionally, in the area of people's livelihoods, the emphasis on "improving its ability to lead China's economic and social development endeavors" suggests that welfare policies will balance fiscal sustainability. The military's directive to "simultaneously carry(ing) out operations, boost combat preparedness, and enhance military capabilities, and accelerate integrated military development" signals a pragmatic strategy aimed at avoiding large-scale conflicts before 2035.
Overall, Chan focuses on the concept of "contextual determinism" that emphasizes the pragmatic nature of the Fourth Plenary Session. Specifically, this means adopting a rational slowdown in growth targets, shifting the focus to domestic consumption as the new driver, and maintaining a risk-averse mindset through bottom-line thinking in risk management. This also reveals the deeper logic behind the Fourth Plenary Session: by leveraging the "three pillars" of party governance, consumption, and the domestic cycle, China aims to navigate an era of high uncertainty, itself a pragmatic approach rooted in bottom-line thinking.
Final analysis conclusion:
This Fourth Plenary Session was held against a "momentous and extraordinary" backdrop, showcasing a strong emphasis on bottom-line thinking and a pragmatic style. Its core lies in rationally adjusting economic growth targets, truly elevating consumption to the cornerstone of the domestic demand strategy, and focusing on technological self-reliance and strengthening security boundaries. The deeper logic behind this is to lead social transformation through the CCP's self-reform, coordinating the domestic cycle with institutional resilience, and together building a "three-pillar" framework to navigate an era of high uncertainty. This framework is designed to support steady and sustainable progress toward Chinese-style modernization.
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Kung Chan is the founder of ANBOUND, an independent think tank.
Yang Xite is a Research Fellow at ANBOUND.
