On Monday, China’s Communist Party will convene its Fourth Plenum, an obscure-sounding meeting that will shape global markets for the next half-decade. There, in Beijing, China’s President Xi Jinping will set the agenda for the country’s 15th five-year plan, which will be published by the national parliament next March.
Western analysts often obsess over “third plenums,” remembering 1978 as the launch of Deng Xiaoping’s reforms. But under Xi, the plan-focused plenums have been the real turning points. In 2015, he announced a shift from headline growth to innovation-led, higher-quality growth. In 2020, in the shadow of Donald Trump’s tariffs and the Covid-19 pandemic, he unveiled a new strategy to turbocharge industrial self-reliance.
This plenum is just as significant, but for a different reason.
The central message this time is continuity. Xi is not rewriting his playbook – he is doubling down. Expect more state-guided innovation, more money for frontier tech, and more support to keep the industrial machine humming. That may surprise those who assumed slowing growth, weak consumption, and a wobbling property sector might eventually force Beijing into significant demand-side stimulus. Not so. The bias is clear: industry first, households second.
Geopolitics explains why. Xi’s economic agenda is now framed less as a growth program than as a security project. Rising global economic uncertainty, political moves toward deglobalisation, and the threat of further US sanctions and export controls weigh heavily on Beijing’s thinking. Xi has argued that the Party must “use the certainty of high-quality development to cope with the uncertainty” of the outside world. In practice, that means mobilising China’s resources to reduce dependence on foreign technology, shore up supply chains, and build leverage against external shocks.
The Party’s flagship newspaper recently ran eight commentaries under the pseudonym “Zhong Caiwen” – a pen name of Xi’s top economic commission. The candour about China’s problems was remarkable: supply outstripping demand, persistently low prices, local government finances under strain, and property prices struggling to stabilise. And yet the conclusion was not a call for fiscal transfers or consumer handouts. It was an affirmation that China’s future lies in manufacturing and technology, a message underscored by Beijing’s launch of unprecedented rare-earth export controls on 8 October.
According to Zhong Caiwen, expect more policy support for artificial intelligence, robotics, and biomedicine, as well as “smart” and “green” upgrades in traditional sectors such as steel, chemicals, and machinery. There is good news for Chinese entrepreneurs too, as the national planning agency is studying how to foster unicorn companies in strategic industries. At the same time, the government is considering a new system of “total factor productivity indicators” to steer capital toward more efficient uses and ensure the tech boom helps offset slowing growth and a looming demographic crunch.
Xi is staying the course on industrial self-reliance, even if it causes overcapacity and strains global trade ties.
The problem is overcapacity. Years of subsidies have already produced “involution”: overproduction that crushes prices profits, and tax revenues. A July meeting elevated “disorderly competition” and “backward production capacity” to matters of national concern, and gradual consolidation is evident in industries such as electric vehicles and solar panels. But Xi’s only concrete suggestion so far has been industry self-discipline, suggesting that market efficiency remains less important than technological effectiveness. More Chinese surpluses will hit world markets, but in different emerging industries. That means rising tensions, as policymakers around the world look for ways to shield domestic producers.
What about reforms to rebalance the economy? They are on the table, just not on top. Consumption targets, new welfare spending, and efforts to break down local protectionism are all being discussed. Beijing even rolled out its first nationwide baby bonus this year. But the politics are tough. Xi is reluctant to devolve fiscal power to local governments or empower households through major welfare expansion. Without the security rationale that drives industrial policy, structural reforms will lag.
All of this unfolds against a backdrop of record purges that have prompted speculation about the extent of Xi’s control. Scores of generals and senior officials have disappeared from public view. Attendance at the plenum will be watched closely: if even some of the rumours about disciplinary investigations are true, it could be the thinnest Central Committee turnout in decades. Yet, far from weakening Xi, the crackdown underscores his ability to control the machinery of power. He still calls the shots.
For foreign businesses and governments, the signal is blunt. Xi is staying the course on industrial self-reliance, even if it causes overcapacity and strains global trade ties. Structural reforms will move forward but struggle to deliver a domestic demand surge. China’s economic strategy is not just about development – it is about national security in an indefinite era of confrontation and uncertainty.
