In Depth: Tech Self-Reliance, AI Take Spotlight in China’s Five-Year Plan

China’s leadership has set a clear agenda to attain technological self-reliance and to position artificial intelligence (AI) as the linchpin of its strategy for industrial modernization, as detailed in the draft for the country’s 15th Five-Year Plan covering 2026-2030. This marks a shift toward reducing foreign tech dependence, particularly amid escalating technological competition with the United States. "High-quality growth" and "technological self-reliance and self-strengthening" are identified as top priorities in the October 23 communique released after a key Communist Party meeting. The plan also emphasizes boosting innovation efficiency to stay globally competitive, as noted by Zhou Chengxiong of the Chinese Academy of Sciences[para. 1][para. 2][para. 3][para. 4].

China’s economic strength is underpinned by its manufacturing industry, and leaders have committed to upgrading traditional sectors, such as mining and shipbuilding, while championing strategic emerging industries like renewable energy and the low-altitude economy. Additionally, the plan strategically focuses on "future industries" — including AI-powered robots and 6G wireless communications — as key long-term growth drivers[para. 5][para. 6][para. 7].

Deputy Secretary-General Lu Feng of the China Electronics Enterprises Association explained that strategic emerging industries are now the primary theater for global economic competition and will impact international competitiveness in the near term. Concurrently, the modernization of traditional industries remains essential to realizing China’s high-quality development objectives[para. 8].

The push for self-reliance intensified following the US clampdown since 2018 on China’s access to key technologies — notably chips, semiconductor equipment, and industrial machine tools. In response, China’s leadership has called for “extraordinary measures” and targeted breakthroughs in high-end technologies like integrated circuits and advanced precision tools, critical for sectors from automotive to smartphones. Current reports highlight China’s continued dependence on foreign suppliers for advanced machine tool components, despite domestic sufficiency in low- and mid-tier products. The US and allied countries have imposed sanctions on 30 major Chinese machine tool firms, further complicating China’s advancement up the industrial value chain[para. 9][para. 10][para. 11][para. 12].

The semiconductor sector acutely embodies these technological constraints. US export controls introduced since 2022 not only restrict AI chips but also the machinery for their production. US chipmaker Nvidia experienced a drastic drop in its China market share from 95% to zero due to export controls, prompting domestic substitutes like Cambricon and Huawei to fill the void. Notably, Chinese firms such as ByteDance and major state-owned telecoms have significantly increased orders for local AI chips, boosting domestic industry revenue and innovation[para. 13][para. 14][para. 15][para. 16][para. 17][para. 18].

China’s tech giants, along with up-and-coming firms, are aggressively developing homegrown chips. AI has been explicitly identified by Beijing as “mandatory” for the upcoming industrial upgrade[para. 19]. The government’s “AI+” action plan, launched in August, aims to deeply integrate AI into six critical sectors by 2027, with the objective that over 70% of next-gen smart devices will utilize AI[para. 20].

The domestic AI industry has surpassed a valuation of 900 billion yuan in 2024, housing 5,300+ companies (71 worth above $1 billion). Large language models (LLMs) are credited as the biggest AI breakthrough, currently driving operational efficiency and soon set to accelerate R&D in fields like semiconductor design and novel pharmaceuticals. As AI demand grows, China is investing in upgrading its information infrastructure and accelerating toward 6G wireless. Commercial 6G deployment is anticipated around 2030, with satellite internet seen as pivotal for the transition and China’s telecom sector now opened to competition in satellite mobile communications[para. 21][para. 22][para. 23][para. 24][para. 25][para. 26][para. 27][para. 28][para. 29][para. 30][para. 31][para. 32][para. 33].