China's aim to surpass US technological power is the key to understanding the 15th Five-Year Plan

In the last twenty years, China has achieved the feat of turning an economy with approximately $2,000 GDP per capita into one of the world’s leading innovation hubs, with close to $14,000 today. The Chinese government plans to take this further. Its next goal, announced in the Central Committee of the Communist Party of China’s 15th. Five-Year Plan, released on 13 March, is to establish China as the world’s dominant technological power.Reaching this objective will require China to lead in frontier technologies. Chinese companies have so far performed better at developing applied technologies due to positive feedback loops with domestic industrial capacity and a fast commercialisation process. To get ahead in frontier technologies, China will need to successfully challenge the United States’ long-held advantage in the development of critical frontier technologies. This is already underway. Our recent research measuring progress in critical technologies in artificial intelligence (AI), semiconductors and quantum computing points to China rapidly closing the gap with the US while the European Union falls behind. Beyond basic research, China’s speed of adoption of technologies is path-breaking, as demonstrated by its rapid uptake of electric vehicles (EVs), solar panels, industrial robots and 5G infrastructure.The 15th Five-Year Plan distils an important reality. Beijing understands that structural factors make it unlikely that domestic consumption will drive growth; the demographic pressures of an ageing population together with the Chinese economic model’s reliance on suppressing wage growth inevitably limit domestic consumption’s weight in the economy. Instead, the government plans to sustain high growth by expanding the country’s global market share of exports, especially exports of high-tech goods. Export-led expansion is also viewed as a path towards technological self-reliance, another strategic objective. This should allow China to insulate its economy from external shocks while building economic and military capabilities at the frontier, giving China greater leverage and threatening US technological primacy.The 15th Five-Year Plan confirms and accelerates this trajectory. It lays out the mechanisms Beijing will deploy to turn existing momentum into decisive advantage. The plan embeds technological self-reliance as a core national priority, calling for ‘extraordinary measures’ to secure breakthroughs in integrated circuits, foundational software, advanced materials and biomanufacturing. It treats AI as a vertically integrated state project – including models, chips, the cloud and applications – woven into every sector of the economy and society. Semiconductors are designated a ‘pillar industry’ – unlocking subsidies, procurement preferences and regulatory support on a scale that treats the sector as foundational to the entire industrial base. The plan also signals deeper integration of AI-powered devices into consumer markets through subsidies, leveraging state-held data reservoirs to give domestic developers an edge that foreign competitors cannot easily match. For the first time, it explicitly references ‘exploring development paths for general artificial intelligence,’ underscoring long-term strategy even if current approaches remain contested.These moves serve a dual purpose: economic resilience and military strengthening. Breakthroughs in semiconductors and AI are not merely commercial; they underpin the development of next-generation defence systems, autonomous platforms and command-and-control networks. By reducing dependence on foreign choke points, China aims to neutralise the leverage that the US and its allies have wielded through export controls. At the same time, the plan reframes ‘opening up’ as ‘self-directed opening’ – selective engagement designed to extract technology and markets on China’s terms rather than integrate into a US-led order.This strategic clarity should alarm Washington and Brussels alike, albeit for different reasons. For the US, the 15th Five-Year Plan poses a direct threat to its technological hegemony and leadership in foundational innovation – a position it has long taken for granted. China’s combination of massive R&D scale, rapid patenting, swift commercialisation and state-orchestrated data advantage is eroding that edge faster than many expected. If Beijing succeeds in leapfrogging into next-generation semiconductors and embedding AI across its industrial and military systems, the US risks losing the very capabilities that underpin its economic edge, military superiority and ability to shape global standards. The plan’s emphasis on ‘pillar industries’ and ‘extraordinary measures’ signals that Beijing is prepared to accept short-term costs for long-term advantage.Europe faces an equal challenge, though one rooted in its export-dependent economic model. As a major exporter of high-value machinery, chemicals, vehicles and precision equipment, the EU has thrived on open markets and technological complementarity with the world. China’s drive to dominate critical technologies and flood global markets with advanced, lower-cost alternatives – including of EVs, batteries, solar technology, robotics and AI-enabled systems – directly undercuts that position. Our previous work highlights Europe’s disadvantage: not only does the EU trail in generating radical novelties, but it is the slowest to adopt and replicate breakthroughs from both the US and China. If Chinese high-tech exports continue their rapid ascent, Europe risks industrial decline, lost market share and the erosion of the innovation ecosystems that sustain its prosperity. The 15th Five-Year Plan makes clear that Beijing’s export push is deliberate and sustained, not a temporary surplus. Consumption will not rebalance the Chinese economy quickly enough to absorb excess industrial capacity; global market share will.This is a reprint. This article has been published as part of Bruegel Zhonghua Mundus Newsletters.