SHARE Share to Facebook Share to Twitter Share to LinkedIn Share to Email Print This PostWith ImagesWithout ImagesAs China pursues greater heights in frontier technology, it is also reckoning with the persistent problems of domestic demand, debt and demographic change.This was clear in the documents released after the National People’s Congress and the Chinese People’s Political Consultative Conference, including the 2026 government work report and the 15th five-year plan outline.The work report and the draft plan for national economic and social development promote AI for industrial transformation, setting it up as a driver of economic growth, technological self-reliance, military modernisation and social governance. The report promotes the AI Plus Initiative, a project that aims to facilitate the adoption of AI across sectors, alongside cloud integration and the use of big data to build smart manufacturing and upgrade micro, small and medium enterprises.The report further calls for large scale commercial application of AI, infrastructure projects on hyperscale intelligent computing clusters, and improved AI governance. Targeted future industries include quantum technology, embodied AI, brain–computer interfaces and 6G. National-level resource mobilisation is planned to increase investment in research and development, with the aim of achieving self-sufficiency in strategic scientific and technological infrastructure while cultivating and attracting scientists and professional talent. (Another Strategist article focuses on AI in the five-year plan.)Of 109 major projects planned for the period under the 15th five-year plan, 28 focus on advancing new industries, developing frontier science and technology and boosting innovation capacity. This commitment is observed in the 2026 budget, with central government spending on science and technology increasing by 10 percent in 2025 to 426 billion yuan (A$87.0 billion). Total national spending in this sector was 5.4 trillion yuan in the 14th five-year plan period and is set to rise under the incoming plan.Several longstanding challenges for the government will receive greater policy attention than before. Amid lower GDP growth rate targets (between 4.5 and 5 percent, compared with more than 6 percent in 2021), boosting domestic demand and consumption is the top task for a second consecutive year, having ranked below industrial development and science and technology innovation until 2024. The government has announced 250 billion yuan in ultra-long-term special treasury bonds to support the trade-in of consumer goods, alongside a 100 billion yuan special fund for subsidised loans to expand demand.The 15th five-year plan recognises common prosperity as a major strategic task. In the work report, public wellbeing now precedes climate and security, despite having consistently ranked last in previous reports. Public wellbeing comprises fundamental issues such as raising employment levels and incomes; improving education, health care and insurance; and strengthening social governance and stability. As China’s population shrinks and ages, subsidies have been proposed for such things as childcare and maternity leave to improve marriage and birthrates. Notably, education, included in science and technology for the past two years, has been reassigned to the wellbeing section and given a greater focus on equity, access and quality. Improving social security, incomes and healthcare services is critical to increasing consumption sustainably.Food and energy security lead among the six key security areas, with six major projects outlined in the 15th five-year plan. The ongoing war in Iran has only highlighted the instability of global supply chains. While China dominates critical minerals and rare earths, often restricting supplies to counter US tariffs, it is still heavily reliant on imports of agricultural products, crude oil and natural gas. Strategic stockpiling is also identified as crucial for security, stability and self-reliance.Systemic risks such as local government debt and real estate have been moved to the end of the list of major tasks, having previously been closer to the middle. However, the report also uses harsher language to deter violations in these areas. In response to new hidden debts, unauthorised tax incentives to attract investments, and irregular subsidies being offered by local governments, the report calls for ‘stringent measures to prevent fraudulent debt resolution’ and ‘enforcing prohibition on incurring new hidden debts in breach of regulations as an ironclad rule.’ A 6.7 trillion yuan increase in the treasury debt shows that the central government intends to absorb greater costs and reduce pressure on local governments.Finally, in a telling shift, when discussing ethnic minority regions, the report omits the standard phrase ‘improving the regional ethnic autonomy system’, noting only the need ‘to strengthen the sense of community of the Chinese nation’. This comes alongside the signing of the Law on Promoting Ethnic Unity and Progress, which aims to further assimilate minority groups and reduce diversity.This year’s meetings of the national assemblies have shown that China is accelerating towards a high-tech future while anchoring itself in systemic repair and greater ideological conformity.