China's new Five-Year Plan (FYP) signals continuity in economic policies, deepening a domestic supply-demand imbalance and intensifying global trade tensions. This strategy, prioritizing industry over households, fuels industrial overcapacity and surging exports. China's core objective is achieving technological supremacy to bolster state power and geopolitical advantage, viewing current global dynamics as an opportunity for a power shift.
The FYP allocates ambitious R&D spending to secure a leading role in the "next round of technological revolution," particularly in AI and emerging technologies. Despite China's over 30% global manufacturing share and leadership in 90% of critical technologies, its economy faces deflation, collapsing investment returns, and a domestic demand crisis. This export-driven growth, exemplified by over 50% growth in EU imports from China (2019-2025), is perceived as a "second China shock," prompting tariffs and trade barriers from the US, EU, India, Brazil, Argentina, and Russia. Western economies must recognize the FYP as a long-term strategic orientation to revise the global balance of power, requiring comprehensive political responses beyond narrow economic measures.
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