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Alice Li

Though China moved away from a command economy decades ago, its successive five-year plans have remained a pillar of macroeconomic policymaking.
Despite that seeming contradiction, under the 14 plans implemented since 1953, Beijing has turned what was a limited industrial capacity into a scale of mass production that has earned China a reputation as the “world’s factory.”
Beijing is now endeavouring to move higher in the value chain and become a global hub for innovation in cutting-edge sectors – and the next five-year plan, the 15th, is expected to be an important part of that process.
The previous iterations of the plan, covering more than seven decades of policy shifts, offer a convenient survey of the country’s long and complex economic history. To help illustrate and explain that trajectory, we have curated several milestones from these foundational documents.
First five-year plan: the rise of heavy industry
When the People’s Republic of China was founded in 1949, the country had only been able to pursue its industrialisation in fits and starts. Economic recovery after decades of conflict and isolation from Western countries amid the ideological tensions of the Cold War made circumstances all the more difficult.
In China’s first five-year plan, implemented in 1953, the top priority was to “mobilise all resources” to advance the construction of the “156 industrial projects” – which included large, capital-intensive coal mines, power plants, steel mills and machinery factories – with help from the Soviet Union.
Investment in industrial projects during the first five-year plan accounted for 58.2 per cent of total investment. As a result, China’s heavy industry accounted for 45 per cent of industrial output by the end of the plan, compared with 35.5 per cent in 1952.
During those five years, China established its first automotive plant in the northern city of Changchun, which was later integrated into what is now China FAW Group.
Other major developments during the first five-year plan included the reorganisation of Angang Steel, now the world’s third-largest steel producer, as a central state-owned enterprise under the Ministry of Heavy Industry, and the early development of the Beijing Electronic Tube Factory, the predecessor of Apple supplier BOE Group, following its establishment in 1952.


Seventh five-year plan: a technological leap forward
In March 1986, the first year of China’s seventh five-year plan, Beijing began promoting an initiative aimed at achieving technological breakthroughs known as the 863 Programme – named for the month it was established.
Modelled on the United States’ Strategic Defence Initiative, it prioritised biotechnology, aerospace, information technology, advanced defence, automation, energy and new materials, channelling major financial and policy support into projects critical for future defence and economic development.
The programme, featured in six consecutive five-year plans, developed products like the Shenzhou spacecraft, the Jiaolong submersible, the Tianhe-1 and Tianhe-2 supercomputers and the Loongson microprocessor.
Ninth five-year plan: handling the Asian financial crisis
China’s ninth five-year plan, released in 1996, carried an annual gross domestic product growth target of 8 per cent, lower than in the previous five years due to concerns about inflation.
But the Asian financial crisis, which began in 1997, weakened exports, while weak domestic demand and reduced investment led to deflationary pressure. With a set growth target, the central government switched to policy guidance that encouraged domestic demand.
“The central government realised that to reach the targets for the ninth five-year plan, policy needed to shift towards preventing the economy from losing momentum after a soft landing, amid weak domestic and external demand,” wrote Yin Jun, an associate professor at Peking University, in his book China’s Plan for Economic and Social Development.
Alongside macroeconomic measures such as interest rate cuts and the issuance of bonds, China introduced “golden weeks” in 1999, extending the Lunar New Year, Labour Day and National Day holidays into week-long breaks through adjusted work schedules. They remain the country’s peak seasons for travel and consumption.
Thanks to these policy adjustments, China’s economy grew at an annual rate of 8.3 per cent from 1996 to 2000, compared with a global average of 3.8 per cent. By 1998, China’s per capita income reached US$800, with the country entering the ranks of middle-income economies.


10th five-year plan: China joins the WTO
With China expected to join the World Trade Organization sometime between 2001 and 2005, a “going global” strategy was introduced in the 10th five-year plan to encourage overseas investment in sectors in which China had a comparative advantage.
The government supported companies in foreign contracting and overseas processing to boost exports of products, services and technology. It also encouraged them to establish research and development and design centres abroad and pursue multinational growth.
Following the introduction of the strategy and supporting policies, China’s outward direct investment surged from US$6.9 billion in 2001 to US$12.26 billion in 2005. That figure reached US$162.8 billion last year.
Chinese companies increased their global presence during the period, with TCL Corporation acquiring German television maker Schneider Electronics in 2002, and Lenovo acquiring IBM’s personal computer division in 2005.
14th five-year plan: innovation the priority
At a news conference in July, Zheng Shanjie, the head of the National Development and Reform Commission – the country’s top economic planner and the body responsible for drafting the five-year plan – said the 14th plan, with a coverage period ending this year, had “elevated innovation to an unprecedented level of importance”.
Following the US-China trade war during US President Donald Trump’s first term from 2017 to 2021, when Washington restricted exports of chips and semiconductors, China placed more emphasis on self-reliance and innovation in the 14th five-year plan, which began in 2021 and ends this year.
The plan emphasised original innovation capability and technological breakthroughs in key areas such as artificial intelligence, neuroscience and aerospace. It also called for further promotion of “emerging industries”, including biotechnology and electric vehicles, while strategically planning for “future industries”, such as gene technology and energy storage.
As a result, China is becoming increasingly self-reliant in key technologies like chips and has emerged as an innovation hub in cutting-edge sectors like humanoid robots.


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China’s first plan pushed industrialisation, but after the country became the ‘world’s factory’, focus has shifted to advanced technologies


China’s first plan pushed industrialisation, but after the country became the ‘world’s factory’, focus has shifted to advanced technologies.


How have China’s 5-year plans shaped the country’s economic trajectory?

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}China’s first plan pushed industrialisation, but after the country became the ‘world’s factory’, focus has shifted to advanced technologies

China’s first plan pushed industrialisation, but after the country became the ‘world’s factory’, focus has shifted to advanced technologies