Editor's note: Xin Ge, a special commentator for CGTN, is a research fellow at the Institute of Public Policy and Governance, Shanghai University of Finance and Economics (SUFE), and a chair associate professor at the School of Public Administration and Policy, SUFE. The article reflects the author's opinions and not necessarily the views of CGTN.

As China enters the critical first year of its upcoming 15th Five‑Year Plan (2026–2030), the nation faces a defining moment in its economic trajectory. Confronted with a complex interplay of global slowdown, heightened geopolitical tensions and shifting domestic dynamics, China has signaled a strategic pivot: from sheer expansion to sustained high‑quality development, driven by innovation, structural upgrading and a resilient internal economic engine.

At the opening of a study session at the Party School of the CPC Central Committee (National Academy of Governance) for principal officials at the provincial and ministerial level on January 20, 2026, Chinese President Xi Jinping underscored the priority of achieving a "good start" to the 15th Five‑Year Plan, emphasizing the need to construct a modern industrial system, deepen technological innovation and foster new quality productive forces. These are not mere policy slogans – they reflect a conscious response to intensifying external pressures and evolving internal imperatives.

China's economic resilience in recent years is evident in official national accounts: In 2025, the country's gross domestic product (GDP) reached 140.19 trillion yuan ($20.12 trillion), expanding by 5.0 percent year‑on‑year at constant prices, successfully meeting the government's target despite global economic challenges.

However, continued reliance on traditional engines like investment and export growth has revealed structural limits. While exports contributed to overall growth, domestic demand remains under-leveraged, and demographic headwinds and real estate adjustments underscore vulnerabilities that cannot be offset by old‑style models alone.

Recognizing these structural shifts, the leadership's answer is a strategic rebalancing – prioritize innovation as the primary growth driver while strengthening domestic demand and ensuring economic security. This marks a clear shift in China's development philosophy – one that seeks to move beyond headline GDP figures toward more sustainable, resilient and technologically grounded growth.

This shift is in line with China's long-standing practice of using five-year plans as a strategic compass. Over decades, these plans have evolved from merely quantitative targets into sophisticated frameworks guiding industrial modernization and social development. Notably, the 15th Five‑Year Plan advances this trajectory by explicitly prioritizing innovation, structural transformation and new quality productive forces as central pillars.

In this context, innovation is no longer framed as a mere policy aspiration, but as a central organizing principle shaping China's economic agenda. Recognizing that technological capability underpins national competitiveness and resilience, China's science and technology authorities have placed greater emphasis on original innovation, breakthroughs in core technologies and the integration of scientific research with industrial applications for the 2026–2030 period.

Statistics further evince the scale and intensity of China's innovation investment. In 2024, national research and experimental development (R&D) expenditure exceeded 3.6 trillion yuan – an increase of 8.3 percent from the previous year.

Moreover, China's R&D push is increasingly broad‑based: Investment by high‑tech manufacturing sectors has continued to grow at a robust pace, research in advanced materials and artificial intelligence has accelerated, and spending on basic research has recorded annual increases of over 10 percent in recent years. All of these elements contribute to expanding China's capacity to produce globally competitive technologies while reducing its vulnerability to external technological constraints.

Innovation is not just about frontier breakthroughs; it is about productive transformation at scale. China's focus on translating R&D achievements into widespread applications, from advanced manufacturing and smart factories to digital infrastructure, reflects an understanding that innovation must elevate productivity across the economy.

Moreover, a renewed national focus on high-quality development entails building a modern industrial system that is adaptable, competitive and future-oriented. This means upgrading traditional sectors while simultaneously cultivating new ones – from renewable energy and advanced manufacturing to digital technology and biotechnology.

The broader consensus within Chinese academia and policy circles highlights efforts to develop regionally differentiated innovation ecosystems – that is, encouraging localities to leverage their comparative strengths while contributing to national priorities. Such an approach aims not only to narrow regional disparities, but also to ensure more balanced and inclusive development across urban and rural areas.

The emphasis on innovation dovetails with efforts to expand domestic demand – a key policy thrust to balance China's historically export‑led growth model. Measures to stimulate household consumption, strengthen social welfare systems and reinforce market dynamics are all designed to reinforce internal growth drivers and cushion the economy against external shocks. Recent government initiatives, including consumer subsidies and greater support for the services sector – which grew faster than goods sales in 2025 – underscore the pivot toward service‑led domestic demand.

China's pursuit of high-quality development, however, does not equate to a turn toward insularity. On the contrary, the country continues to advance high-standard opening-up and deepen international cooperation. Strategic engagement in trade, technology partnerships and infrastructure remains integral to China's economic blueprint, creating channels for shared growth and mutual benefits within the global economy.

At the same time, China recognizes that economic resilience depends on a robust internal market and social stability. By securing employment, nurturing talent pipelines and enhancing social services, policymakers aim to strengthen the foundation upon which innovation and structural transformation can flourish.

As China embarks on the 15th Five-Year Plan, it is clear that high-quality development is the guiding star of national economic strategy. Innovation, both in technology and industrial application, is not a peripheral goal but the main engine of future growth. Coupled with structural upgrading and strengthened domestic dynamics, this approach offers a blueprint for navigating today's uncertainties while building a foundation for long-term resilience and global competitiveness.

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