According to the National Bureau of Statistics' report released on February 28, 2025, China's gross domestic product (GDP) grew by 5.0% year-on-year, surpassing the 140 trillion yuan mark for the first time and successfully achieving the expected target. The average surveyed urban unemployment rate stood at 5.2%, below the control target of approximately 5.5%. Total goods imports and exports exceeded 45 trillion yuan for the first time, rising by 3.8% compared to the previous year, positioning China to maintain its top global ranking for the ninth consecutive year and reinforcing its role as a key stabilizer in global industrial and supply chains.

With the conclusion of the 14th Five-Year Plan and the commencement of the 15th, China faces an evolving international market landscape. Key questions include how China can seize the initiative amid major-power competition in 2026, the role of artificial intelligence in global industrial rivalry, and how macroeconomic policies should be calibrated under a moderately accommodative monetary policy. Ahead of the National People's Congress sessions, a former Vice Minister of Finance shared his insights on these issues.

Global competition in artificial intelligence has moved beyond purely technological rivalry. The world is undergoing transformative changes unseen in a century, and China's stable development serves as a cornerstone of global stability. Guided by new development philosophies, China must seize opportunities presented by the fourth industrial revolution. Advancements in AI and energy transition are two critical factors that will enable China to remain in the leading tier and succeed in this competition.

The competition in AI has entered a new phase, shifting from pure technology contests to comprehensive rivalry involving application scenarios and regulatory frameworks. China and the United States lead the field. While the U.S. retains advantages in computing power, American AI leaders have acknowledged that China is rapidly closing the gap. Meanwhile, China leads in AI application scenarios and energy supply. For the U.S., a major challenge under the new paradigm is the equation of "power as computing power." China's electricity consumption reached 10.4 trillion kilowatt-hours in 2025, accounting for about one-third of the global total—2.3 times that of the U.S. and over 3.5 times that of the EU. This reflects breakthroughs in power supply achieved through energy transition efforts during the 13th and 14th Five-Year Plan periods, including the establishment of a world-leading ultra-high-voltage grid. China's leading position in energy transition provides a solid foundation for AI development and facilitates vast application scenarios.

The core of great-power competition lies in productivity. In November of the previous year, the U.S. President signed an executive order initiating a "Genesis Mission," modeled after the Manhattan Project, aimed at consolidating American AI capabilities to achieve scientific breakthroughs, ensure national security, maintain energy leadership, and generate high investment returns. The mission set a clear timeline, demanding over 20 scientific breakthroughs within 60 days, focusing on advanced manufacturing, biotechnology, critical materials, nuclear fusion and fission, quantum communication, and semiconductors. Advanced manufacturing is central to U.S. efforts to reshore production, yet the country faces significant challenges in workforce quality, engineer numbers, and entrepreneurial capacity. Even in critical defense sectors, production scale and quality have encountered difficulties, prompting executive measures to cap executive compensation and restrict stock sales until objectives are met. Competition between China and the U.S. in high-tech fields will intensify in 2026, but fair competition based on market principles will allow China to remain competitive. There is substantial potential for Sino-U.S. cooperation; both nations should enhance dialogue and engage in mutually beneficial collaborations to bolster global economic growth and improve governance. Future economic interactions should focus on expanding cooperation while narrowing differences, guided by principles of mutual respect, peaceful coexistence, and win–win outcomes.

During the 15th Five-Year Plan period, China's annual real GDP growth potential is estimated at around 5%, driven by factor inputs contributing approximately 3% and total factor productivity about 2%. Real growth is calculated at constant prices, while nominal growth—which includes inflation—determines total economic expansion. With more proactive macroeconomic policies, especially moderately accommodative monetary measures, China aims to achieve reasonable price recovery. Coordinated efforts in proactive fiscal policy and accommodative monetary policy are essential. In 2025, China's fiscal deficit ratio was around 4%, supported by 4.4 trillion yuan in local government special bonds, 1.3 trillion yuan in ultra-long-term special treasury bonds, and 500 billion yuan in special treasury bonds. Of the ultra-long-term bonds, 800 billion yuan was allocated to major national strategies and key security areas, while 500 billion yuan supported equipment upgrades and consumer trade-ins. Another 500 billion yuan was used to replenish bank capital and mitigate financial risks. Fiscal authorities have indicated that expenditure intensity will not decrease in 2026, with strengthened support for key sectors. The overall budget, including deficit size, will require approval by the National People's Congress. Moderately easy monetary policy should stabilize growth and facilitate reasonable price increases. With the consumer price index fluctuating at low levels and the producer price index in negative territory in 2025, policy should help restore prices to appropriate levels. If real growth averages around 5% and inflation around 2% during the 15th Five-Year Plan period, nominal growth could reach about 7%, potentially adding over 36 trillion yuan to economic output—surpassing the expansion seen in the 14th Five-Year Plan.

China's real growth during the 15th Five-Year Plan period could remain between 4.5% and 5% or higher. A key challenge is the ongoing decline in producer prices, which necessitates more proactive macroeconomic policies to achieve positive figures and eventually reach around 2% inflation. Against intensifying global productivity competition, qualitative improvements and quantitative growth are crucial. The goal is to basically achieve socialist modernization by 2035, with GDP reaching or exceeding 200 trillion yuan and per capita GDP surpassing $20,000. By mid-century, China aims to become a modern socialist country that is prosperous, strong, democratic, culturally advanced, harmonious, and beautiful, with strong confidence in realizing these objectives.

The Central Economic Work Conference emphasized an internal demand-driven approach for 2026. As the world's second-largest economy, China must adhere to new development philosophies, fostering a dual-circulation development pattern where domestic circulation plays the leading role, supported by international engagement. Internal demand encompasses consumption and investment. A complete internal demand system includes multi-tiered consumption and investment demand, a supply system meeting domestic needs, and efficient resource allocation mechanisms spanning production, distribution, circulation, and consumption. Achieving internal demand-led growth requires multi-faceted efforts: expanding consumption underpinned by income growth, promoting investments with reasonable returns, and ensuring financially sustainable credit demand. Boosting consumption hinges on employment growth, social security improvements, income structure optimization, and expanding the middle class. Effective investment should focus on new infrastructure and high-tech industries. In line with policies on high-level opening-up, efforts to enhance a market-oriented, law-based, and internationalized business environment will stimulate private investment and attract foreign direct investment.