2 May 2025, NIICE Commentary 10789
Raguman V
In an increasingly interconnected world, the relationship between international development and the global economy has become more critical than ever. International development refers to efforts aimed at improving the quality of life and economic well-being of people, especially in low- and middle-income countries. As economic globalization deepens, events in one part of the world can quickly influence development outcomes elsewhere. Whether through multinational corporations, climate policies, or supply chain disruptions, the global economy is a key driver of both opportunities and inequalities in development.
The Global Development of the Chinese Economy
China’s upcoming 15th Five-Year Plan (2026–2030) represents a decisive step toward constructing a more resilient and self-sustaining economic model. Facing rising global uncertainty, trade tensions, and technological rivalry, particularly with the West, the Chinese leadership is focusing on domestic innovation and internal demand as the cornerstones of future economic growth. President Xi Jinping has underlined the necessity for China to restructure its economy by nurturing strategic sectors such as green energy, artificial intelligence, and advanced manufacturing. The intention is to not only upgrade China’s industrial capabilities but also to lessen its dependence on foreign technologies.
This shift is embedded in China’s "dual circulation economy" which seeks to balance domestic consumption with external trade engagement. While this model reflects a broader strategic pivot to ensure internal stability and international competitiveness, China must navigate significant domestic and external hurdles. These include mounting local government debt, an aging population, and declining investor confidence. The country’s ambitious climate and sustainability goals are also at risk due to the ongoing approval of coal projects, raising questions about the authenticity of its environmental commitments.
China’s Economic Adaptability Strategy
The 15th Five-Year Plan highlights a forward-looking economic adaptability strategy that emphasizes modernization, innovation, and risk management amid rising global uncertainties. Its core goal is to make China a dominant force in the domestic economic system by ensuring economic self-resilience. As global tensions, including escalating tariff disputes, reshape the international environment, China’s strategy pivots toward safeguarding national security and minimizing exposure to external shocks.
A significant element of this strategy is reducing reliance on traditional manufacturing sectors and low-skill employment by fostering productivity through technological innovation, scientific research, and internal capacities. The transition aims to create new sources of economic vitality and reduce vulnerabilities linked to global supply chains. The intensifying tariff-related friction, particularly with the United States, is accelerating technological decoupling, an intentional effort to separate China’s technological ecosystem from Western influences.
To counter external volatility, China seeks to enhance domestic infrastructure and strengthen regional trade. By stabilizing internal demand, China aims to shield its economy from external disruptions. The policy emphasis is not only on development but also on economic stability in a world increasingly characterized by geopolitical fragmentation.
Western Tariffs and China's Financial Strategy
The intensification of trade tensions, especially U.S. tariffs on Chinese goods, has deeply influenced the structure and priorities of China’s financial and economic planning. In direct response to these external pressures, China has adopted the "dual circulation" approach, boosting domestic consumption while maintaining strategic, selective links to the global market. This approach signals China’s ambition to reduce its dependence on Western markets by investing robustly in innovation, high-tech sectors, and resilient supply chains. While this inward shift is designed to bolster economic security, it also risks deepening the economic decoupling between China and key Western economies, potentially leading to long-term disruptions in international trade and cooperation.
Insights from Economic Forums and Policy Debates
The 2024 Economic Forecast Forum held in Beijing brought together policymakers and experts to evaluate the trajectory of China’s economic reforms. Held under the theme "The 15th Five-Year Plan: Advancing High-Quality Development," the forum underscored the need to nurture new, localized productive forces to ensure long-term, sustainable growth. Priority sectors outlined included artificial intelligence, high-end manufacturing, green and low-carbon technologies, and cutting-edge digital infrastructure. The forum also spotlighted the implementation of over 300 reform initiatives proposed by the Communist Party, aimed at institutional strengthening and development support. In addition to economic modernization, discussions highlighted the urgent need to enhance urban governance, increase financial literacy, and upgrade rural financial systems, key elements of China’s broader modernization framework.
Criticism and International Concerns
Despite its strategic and forward-thinking nature, China’s 15th Five-Year Plan has not been immune to criticism. One of the chief concerns is its intensified focus on self-reliance in key sectors like advanced manufacturing and digital technologies, which could accelerate global economic fragmentation. This inward focus might also reduce China’s demand for foreign goods, putting pressure on export-driven economies that rely heavily on the Chinese market. China’s use of industrial subsidies and restricted market access continues to fuel trade friction, particularly with the United States and the European Union, which may retaliate with further tariffs or regulatory barriers. China's Belt and Road Initiative (BRI), while intended to strengthen global infrastructure ties, has sparked concerns about debt sustainability in developing countries. High-profile examples such as Sri Lanka’s Hambantota Port deal have raised questions about national sovereignty and long-term economic dependency. The debt-trap diplomacy played a major role in the issue of the Hambantota Port by changing the economic environment.
Foreign businesses operating in China also face persistent challenges, including opaque regulatory frameworks and inconsistent enforcement, which dampen investor confidence and hinder innovation. While the plan emphasizes environmental sustainability, China’s continued reliance on coal-powered energy contradicts its climate pledges and undermines global climate collaboration.
Conclusion
China’s 15th Five-Year Plan marks a strategic turning point in its approach to international economic development via balancing growth and stability. By focusing on high-quality, self-sustaining growth, technological independence, and ecological transformation, China seeks to secure a leading position in the global economy. However, the plan’s inward-looking orientation and assertive economic policies risk undermining global cooperation, trade equilibrium, and climate objectives. The ongoing escalation of tariffs by Western economies has played a critical role in shaping China’s financial and development strategy. The emphasis on aligning development with national security underscores the need to insulate the economy from global shocks. Despite a target of around 5% GDP growth by 2025, challenges such as slowing domestic demand and weakened exports make achieving this target uncertain.
This shift, driven by global trade tension, will have broad implications for international supply chains, investment flows in Asia, and sustainable development strategies. While China’s economic resilience and domestic security are central to its strategy, the potential strain on trade relationships with major partners and disruption to developing economies that depend on Chinese markets could reshape the global economic landscape. Hence, striking a balance between national objectives and international responsibilities will be essential for ensuring that China’s development contributes positively to a stable, cooperative, and inclusive global economic future.
Raguman V is a Research Intern at NIICE and is currently pursuing his MA in International Relations at the University of Madras, India.
Leave a Reply