Xi’s big bet | the weekly recap

The exact nature of Xi Jinping’s Big Economic Bet is becoming clearer by the day.

• At the Party Central Committee’s Fourth Plenum, which wrapped on Thursday, China’s leaders put another chip on the table as they locked in the blueprint for the 15th Five-Year Plan (FYP) (2026-2030).

At the close of the plenum, the leadership published a communiqué sketching out the meeting’s key decisions.

• And while more details will follow over the next week, when the Party issues the full blueprint – and then again in March when the full FYP drops – the contours of the roadmap are already pretty clear.

We unpacked the communiqué for our subscribers this week, but there’s one particular element that’s worth re-emphasizing: The leadership’s #1 priority over the next five years is strengthening China’s already world-beating manufacturing base – what the communiqué calls “building a modern industrial system.”

• To do this, policymakers will double down on fostering emerging and high-tech industries.
• But just as important, they’ll push to upgrade traditional industries by bringing advanced tech to bear.

What’s especially striking is that this goal now outranks technological self-reliance as the Party’s top priority over the next five years.

• Tech self-reliance remains crucial, but it’s been relegated to second billing.

That’s not to say that China’s drive for tech independence will fade in any way.

• Instead, as I discuss below, it signals the leadership is set on bolstering industrial strength as the central means for achieving its wider national objectives.

I mentioned this briefly on this week’s Trivium China Podcast, but the plenum communiqué has only strengthened our confidence about what, precisely, Xi Jinping is trying to achieve by steering China into a “new development pattern” – listed as priority #3 in the communiqué.

• In our view, this “new pattern” represents a genuinely new economic growth model – one that moves China away from property-, investment-, and debt-fueled growth, and toward an economy powered by world-class industries (priority #1) and technological innovation (priority #2).

My colleague Dinny McMahon and I recently laid out the bigger contours of this idealized new growth model in a foundational study for the Center for Strategic and International Studies.

• That publication is a real tome – which we encourage folks to dig into.

One of our key observations is that Xi isn’t looking to “rebalance” the economy toward consumption – as Western (and some Chinese) economists continually call for.

Instead, his focus is squarely on increasing productivity – by cultivating what he dubs “New Quality Productive Forces” – and fostering ever-more world-class industrial and manufacturing giants.

• If done properly, this would incubate a broader base of increasingly innovative, productive, and profitable companies.

These firms, in turn, would then precipitate:

• Rising wages – in the companies themselves, and via the service firms that would spring up to support them
• Rising wealth – as corporate share prices increasingly reflect companies’ enhanced innovation and competitiveness, fueling Beijing’s vision of a “slow bull market” and encouraging Chinese citizens to migrate their savings from the moribund property sector into steadily appreciating public equities
• Rising tax receipts – as bolstered corporate and household wealth translates into sustainable growth in fiscal resources, allowing the state to build out a robust social safety net
• And as a consequence, rising consumption – as households feel less pressure to save for a rainy day, and disposable income becomes a larger and larger share of overall income

Sounds pretty good, doesn’t it? At least from the perspective of Xi Jinping and his colleagues.

• It may sound pretty good to much of the developing world, too, as they find ways to ride China’s industrial slipstream – and enjoy growing amounts of Chinese investment to build the energy, tech, and transportation infrastructure that will support the import of high-quality, cost-competitive Chinese manufactured goods.

That said, China’s push to double or even triple down on not only nurturing new industrial and manufacturing champions, but also on strengthening its traditional industrial base, may sound less appealing to the countries that currently lead in a range of sectors Beijing is now eyeing.

And there’s the rub: If Xi pulls this off, the trade tensions and volatility that we’ve seen in 2025 will look like child’s play compared with what’s coming.

I should also note that it’s far from certain whether China can fully dominate the critical industries of the future.

• But as we read the early signs from the 15th FYP, it couldn’t be clearer that Beijing is going to try like hell.

Xi Jinping is pushing all his chips to the center of the table, and betting that China can be at least partially successful.

• So it’s not like he hasn’t warned us.

On this score, I think it’s time to put to bed the old debate about whether China can innovate.

• China has innovated – and is innovating.
• It is a world leader not only in manufacturing and industrial processes, but in a host of emerging technologies. Full stop.

So if the West is betting that China will fail, and that we can undermine Beijing’s ambitions with a scattershot mix of tariffs and trade restrictions, then we ourselves are going all in with a pair of twos – and hoping for the best.

• If I were a betting man, which I am, I wouldn’t like those odds.

That’s not to say that the US and its allies should simply fold and walk away.

• Instead, they need to strengthen their hand by more explicitly – and collaboratively – fostering a range of frontier innovations, especially in green technology and renewable energy, that can power the next phase of global industrialization and electrification.

Xi has placed his bet. To stay competitive, the US and other countries need to do more than just try to call his bluff.

Andrew Polk, Co-founder, Trivium China

What you missed

Econ and finance

On Friday, Party officials held a press conference to discuss outcomes from the Fourth Plenum and offer further details of the 15th Five-Year Plan (2026-2030) outline, which was approved at the plenary meeting. Here are our top three takeaways from the presser:

• First, Beijing will adopt a more assertive, proactive geopolitical positioning. 
• Second, part of that proactiveness will manifest in better defending – and promoting – China’s economic interests overseas.
• Third, while industry and manufacturing remain key to economic growth, policymakers are also placing greater emphasis on consumption.

Per data released by the stats bureau (NBS) on Monday, China’s real GDP grew by 4.8% y/y in Q3 – down from 5.2% growth the previous quarter, and the slowest growth rate in a year.

• On a nominal basis – which better reflects how businesses and households experience economic conditions – GDP only grew 3.7% y/y.
• This is the tenth consecutive quarter nominal growth has lagged real growth – reflecting deeply embedded deflationary pressures.

Tech

On Tuesday, Reuters reported that ChangXin Memory Technologies (CXMT) is planning an IPO in Shanghai as early as Q1 2026. 

• CXMT is reportedly eyeing a valuation of up to RMB 300 billion (USD 42.12 billion).
• CXMT is China’s leading hope for producing homegrown high-bandwidth memory (HBM) – a key bottleneck for domestic AI accelerator manufacturing.

Net zero

At a State Council executive meeting on October 17, Premier Li Qiang emphasized the need to strengthen domestic green industrial standards to safeguard green trade.

• Many of China’s world-leading cleantech manufacturers have grown increasingly dependent on overseas markets, running the risk of colliding with green trade barriers in Global North markets.
• To tackle this, Li called for efforts to coordinate industrial, technological, financial, and fiscal policies to create a policy environment that supports green trade.
• Li also wants to accelerate the rollout of national standards for green products and technologies that align with international norms.

Politics

It’s official – Xi Jinping has taken down a sitting Politburo member. On October 17, China’s Ministry of Defense (MoD) announced that General He Weidong has been expelled from the Party.

• He has been rumored to be in trouble since early this year.
• Eight other high-ranking military officers were also kicked to the curb, including Central Committee members Miao Hua and Li Xiangyang, who had both previously been considered strong contenders for the Politburo in 2027.
• According to an MoD spokesperson: “These nine individuals seriously violated Party discipline and allegedly committed grave duty-related crimes.”

On Sunday, Xi Jinping sent a congratulatory message to Cheng Li-wun for her election as chair of Taiwan’s pro-Beijing Kuomintang (KMT) party.

• Cheng’s campaign centered on maintaining peace across the Taiwan Strait and making Taiwanese people “proud and confident to say they are Chinese.” She also said she opposes any increases to Taiwan’s defense budget.
• Xi’s note largely repeated familiar calls to “deepen cooperation,” but he added a new flourish, echoing Cheng’s campaign rhetoric by urging efforts to “unite the broad masses of Taiwan compatriots and strengthen their pride, confidence, and conviction in being Chinese.”

Foreign affairs

On Thursday, Reuters reported that China’s four state-owned oil giants have halted purchases of seaborne Russian oil to avoid the risk of US secondary sanctions.

• Even with Beijing’s state-owned giants – Sinopec, Zhenhua Oil, CNPC, and CNOOC – backing off from Russian oil, the effect on China’s oil imports will be minimal.
• This is because the majority of China’s seaborne Russian oil imports are bought by independent “teapot” refineries via a network of middlemen and shadow tanker fleets. Meanwhile, nearly 40% of China’s oil imports from Russia come through pipelines, which are unlikely to face sanctions.

US-China

On Thursday, the White House confirmed that US President Donald Trump will meet Xi Jinping on October 30, on the sidelines of the APEC summit in South Korea.

• Plans for the meeting took shape following a call between the two leaders in September, but a spike in trade tensions over the past couple of weeks had put the summit in doubt.
• Trump waxed optimistic about the meeting, saying, “I think we’re going to come out very well, and everyone’s going to be very happy.”

On Wednesday, the Ministry of Commerce (MofCom) said it will solicit industry opinions in its anti-dumping investigation into US analog chips.

• The probe, launched in September, is widely seen as retaliation for Washington’s expansion of the Entity List the same month.
• MofCom will survey US analog chipmakers, Chinese importers, and domestic producers to gauge the impact of possible anti-dumping tariffs. This gives US chipmakers – and their Chinese customers – a window to shape the outcome.

As always, it was a busy week in China.

• Thank goodness Trivium China is here to make sure you don’t miss any of the developments that matter.