China at economic crossroads
The two sessions — the plenary meeting of the National People's Congress and the National Committee of the Chinese People's Political Consultative Conference — have always been important for China. They are significant because the Chinese leadership finalises critical policy choices, policy documents, and action plans in consultation with representatives of the people.
The consultation is not limited to the Communist Party of China (CPC) members but also includes other political parties, leading experts, businessmen, and others. With China's progress and enhanced economic status, the sessions have also gained global attention. China now contributes almost 30% to global economic growth, accounts for nearly 20% of global GDP and is the world's largest trading partner. It is leading the technological and Fourth Industrial Revolutions. Most importantly, it is home to 1.4 billion consumers. Therefore, China's policies and actions matter to the entire world and help determine the direction of the global economy.
However, the two sessions in 2026 are considered especially relevant for two reasons. First, the CPC leadership will finalise and introduce the 15th Five-Year Development Plan. The 15th plan will provide a glimpse into China's policies, strategies, and action plans for the next five years.
It is expected that, under the 15th Development Plan, China will embark on a new economic model. This transformation will be guided by a vision of high-quality development and led by new quality productive forces and new growth drivers. China will accelerate the transition from big infrastructure investment, export-led and resource-intensive growth, and traditional industries towards intelligent, AI-based industries, futuristic investment, and green, climate-smart, environmentally friendly development. The country will focus on new energy sources and types, as well as disruptive, cutting-edge technologies such as humanoid robots, quantum computing, 6G networks, brain-computer interfaces, artificial intelligence, and technologies linked to the low-orbit economy. Growth will be driven by innovation, new engines of expansion, and domestic consumption.
Recently, President Xi Jinping met with CPC leadership and emphasised that the 15th Five-Year Plan would be extremely important. Over the next five years, China will work to solidify the foundation for socialism and advance towards socialist modernisation. It is pertinent to highlight that, in socialist modernisation, the economy is a critical pillar, and China will strive to create a high-standard Socialist Market Economy with Chinese Characteristics. This has been the ultimate goal of Chinese reforms since 1978.
Since the introduction of reforms, China has consistently worked to develop a Socialist Market Economy with Chinese Characteristics. Learning from best practices was the first step; tailoring them to domestic realities and historical context was the second. Based on this approach, China began shaping its own economic model. In the early stages, it introduced dual-pricing mechanisms and promoted township and village enterprises. Many in the global community predicted failure, arguing that such measures would undermine reforms. However, China remained confident and continued implementation. These programmes proved successful, strengthening the leadership's resolve to pursue deeper reforms and laying the foundation for the modern socialist economic model. Successive leaderships contributed to advancing this objective.
Since the rise of President Xi, efforts to create a socialist economy have intensified. Under his leadership, China is clarifying the role and relationship between the market and the state. China recognises that markets play a key role in determining dynamism and unlocking potential. Market forces help unleash innovation, cultivate technological advancement, and drive growth. They facilitate the free flow of factors of production, commodities, goods, and talent through enhanced connectivity. Therefore, China will promote the market's role in factor allocation, unify the market, and facilitate the smooth movement of services, goods, and talent.
Simultaneously, China acknowledges that the state must play an active role in ensuring the smooth functioning of markets and market players. The state must provide the necessary conditions to strengthen market forces and establish institutional mechanisms that guarantee fair competition and justice. There should be no discrimination, and both domestic and international players should have opportunities to grow. Institutions must act as facilitators of innovation and technological progress rather than barriers. They should also reduce risk and enhance predictability in market operations.
At the same time, China is mindful that building a modern socialist economy requires protecting the environment and safeguarding the planet. Liberal free-market systems have contributed to material prosperity but often at environmental cost, including climate change. As President Xi has noted, since the Industrial Revolution, humanity has created immense wealth, but through intensive exploitation of natural resources. Therefore, China will work with dedication to green its economy — a major objective of the 15th Five-Year Development Plan.
It is important to note that the above discussion on the Socialist Market Economy is based on observations and expectations. For definitive policy guidelines and choices, we must await the outcome of the Two Sessions.
In conclusion, these factors make the upcoming sessions extremely important. The Chinese people, the global community, and experts are closely watching. The policy choices will offer insight into the path China will adopt to achieve socialist modernisation, transform its economy, and further institutionalise a Socialist Market Economy with Chinese Characteristics.
The writer is a political economist and visiting research fellow at Hebei University, China