China: The Great Technological Shift
The upcoming five-year plan places high technology at the core of China's economic model. This is a strategic shift to replace real estate as the growth engine.
An Economy in Transition
The signals revealed by the plenary session are clear: China is entering an unprecedented phase of technological acceleration. According to data compiled by DWS, the share of high technology in total final demand will reach 18.3% of GDP by 2026, nearly double its level from ten years ago. This growth is significant, reflecting a structural shift: replacing an exhausted growth engine—real estate—with a sector whose productivity is expected to drive the future economy.
Between 2022 and 2024, high-tech manufacturing contributed 1.1 percentage points to China's annual GDP growth. Conversely, the real estate sector has reduced growth by an average of 1.7 percentage points each year during the same period. This contrast marks the shift in eras: real estate, long a pillar of the Chinese model and responsible for 30 to 35% of activity, now falls below the 20% threshold. Meanwhile, the density of industrial robots has increased by 50% over five years, China leads globally in patent applications, and accounts for 70% of global AI-related grants in 2023.
These figures reflect both a geopolitical and economic ambition. Beijing aims to reduce its dependence on foreign technologies in critical areas: microprocessors, communications, advanced electronics, robotics, and industrial computing. The shift targets both civilian industries and strategic applications, a duality at the core of the Chinese model. Innovation thus becomes a lever of sovereignty.
Consumption, Services, and Productivity
China's strategy, however, is not solely focused on technological advancement. The upcoming five-year plan also places a significant emphasis on the service sector, which is already responsible for more than half of the country's growth but remains underdeveloped compared to the standards of advanced economies. Authorities have identified untapped demand in personal services, education, healthcare, tourism, and hospitality. In these sectors, demand still far outstrips supply.
According to Elke Speidel-Walz, Chief Economist for Emerging Markets at DWS, the Chinese government is also working to strengthen domestic demand. This involves increasing household disposable income, reforming social security, and improving redistribution. The goal is to reduce the high savings rate, which is a real barrier to consumption. Beijing hopes that the technological sector, which is more productive and less debt-intensive than real estate, will generate higher salaries, more dynamic tax revenues, and stronger consumption.
Together, this depicts a China in transition: a China striving to balance productivity, technological sovereignty, and the expansion of domestic consumption. A key question remains: will this new model be able to provide growth as substantial and consistent as that enabled by the real estate sector over the past two decades? While the answer is not yet certain, the direction is clear. China is betting on the future rather than on concrete.
This content has been automatically translated using artificial intelligence. While we strive for accuracy, some nuances may differ from the original French version.
