China Advances Modernization Efforts Amid Growing Concerns: What’s Next?

Driving Forward with AI and Technology: China’s Blueprint

The closure of China’s National People’s Congress marked a significant moment as nearly 2,800 delegates supported the new five-year strategic plan. The plan focuses heavily on advancing artificial intelligence and other future technologies. With billions of euros already invested in AI, robotics, biotechnology, and renewable energy since 2021, China’s annual budget for these sectors has seen a steady increase of around ten percent per year.

Geopolitical Tensions and Diplomatic Maneuvers

Despite not being explicitly mentioned during the sessions, the tensions involving the USA and the recent attacks on Iran were palpable throughout the Congress. Premier Li Qiang hinted at the volatile global stage, while Foreign Minister Wang Yi underscored 2026 as pivotal for Sino-American relations. The upcoming visit by US President Donald Trump to China, following a somewhat easing encounter at the APEC summit in South Korea, suggests a cautious but open diplomatic channel.

On the military front, China is not holding back either. The defense budget is set to rise by seven percent this year as part of its goal to enhance military readiness and modernization. This is seen as a move to prepare for a long-term strategic competition with the United States, despite the internal restructuring within the military leadership which raises questions about the effectiveness of increased spending without robust command structures.

Internal Challenges: Economic and Social

China faces significant internal economic challenges, with a growth target set between 4.5 to 5 percent for the year—the lowest since 1991. The persisting real estate crisis, indebted local governments, sluggish consumer demand, and an aging population are pressing issues. Li Daokui, a prominent economist, argues for a shift in focus towards boosting domestic consumption, especially by providing financial support to the poorer and older demographics, to stimulate economic activity.

Exports remain a crucial part of China’s economic stability. Alicia Garcia Herrero, chief economist at Natixis Bank, points out that a significant portion of last year’s growth relied on external demand. Any global economic downturn, exacerbated by geopolitical conflicts like the attack on Iran, could hit China hard.

Asserting National Identity and Sovereignty

Amidst external and internal pressures, China continues to push for a unified national identity. A new law aims to strengthen nationalism and puts additional pressure on ethnic minorities, a move critics describe as an intensification of Xi Jinping’s assimilation policies.

The issue of Taiwan remains a delicate subject. China views the democratically governed island as part of its territory, a stance reiterated by Premier Li Qiang as he spoke of advancing the cause of national reunification.

Overall, the Congress showcased China’s drive towards greater autonomy and resilience, positioning itself as a formidable global player while navigating through complex internal and external landscapes. The dual strategy of opening up to diplomatic engagements and preparing for strategic competitions highlights the multifaceted approach China is taking towards its modernization and global standing.

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Lowell Hagan

Lowell Hagan closely follows international affairs. From geopolitical conflicts to economic cooperation, he provides context to help readers better understand global dynamics. His clear, structured style gives meaning to global news.