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Clear sight imperative

By Waldemar Karpa | China Daily Global | Updated: 2026-04-06 22:32
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ZHI YAN/FOR CHINA DAILY

Europe cannot afford to misread China’s 15th Five-Year Plan blueprint for development

China’s current economic policy is disciplined and forward-looking: high-quality growth, technological self-reliance, new productive forces, and a unified domestic market. In Europe, the same agenda is often read through a rather different lens — not only as a development strategy rooted in China’s own stage of modernization but also as a force reshaping competition, industry and political choices well beyond China’s borders. That difference in perception matters — yet so does the fact that Europe’s interpretation is filtered through its own economic pressures, policy constraints and wider global shifts.

For a growing number of Europeans, China is no longer simply a vast market or a manufacturing platform. It has become a system that marries strategic patience with industrial scale and State capacity in ways Europe finds difficult to match. The response is a tangle of admiration, concern and uncertainty. Admiration, because the achievements remain extraordinary. Concern, because China’s structural transformation now intersects with vulnerabilities already present in European economies.

When Chinese Premier Li Qiang set the 2026 GDP growth target at 4.5 to 5 percent — the lowest in decades and below the symbolic 5 percent line — Western media spoke of a reckoning with new realities. Europeans, though, noticed something else: the 15th Five-Year Plan (2026-30) published alongside the target was not a document of retreat. It reads as a blueprint for a different kind of advance.

No serious European observer can wave away what China has accomplished. In four decades, some 800 million people have been lifted out of extreme poverty — roughly three-quarters of the global reduction tracked by the World Bank. GDP per capita has climbed from under $200 to over $12,000. A generation ago, China depended heavily on imported vehicles and foreign automakers; now it accounts for around 70 percent of global EV output. In the World Intellectual Property Organization’s innovation rankings, China broke into the top 10 in 2025 — the only middle-income economy in that company. None of this happened by accident.

But at the same time, European conversation about China has sharpened. Rhodium Group’s February 2026 study, entitled Germany’s “China Shock” Revisited, landed heavily in Berlin: German car exports to China have collapsed by 66 percent since 2022; Volkswagen’s profits from its Chinese joint ventures are down 60 percent. IG Metall now speaks of a “second China shock”. Across Brussels, Paris and Rome, the question is no longer whether China is efficient — that much is conceded — but how these changes are reshaping global markets. This debate is also an argument about Europe’s delayed adaptation to a more competitive global environment — from weak productivity growth and high energy costs to fragmented capital markets and hesitant industrial coordination — alongside broader changes in the global economy.

Technology sits at the center of this anxiety. Beijing is pouring resources into semiconductors, artificial intelligence, robotics, hydrogen and nuclear fusion. From China’s vantage point, reducing dependence on foreign technology is rational and primarily linked to the country’s own development stage, external constraints and its efforts to move up the value chain rather than to an outward-oriented strategy of displacing others. As Pan Jianwei, China’s foremost quantum physicist, put it on the sidelines of this year’s annual session of the National People’s Congress: “Core technologies cannot be begged for or bought.” But from Europe’s vantage point, this drive confirms that the interactions will become more complex.

Basic research spending has risen to a record share of overall R&D expenditure, reinforcing the perception that China is seeking to move further up the value chain rather than simply participate in it. Zheng Yongnian at the Chinese University of Hong Kong, Shenzhen, has described a “new triad” of growth engines — basic research, technology commercialization and financial services — to complement the old triad of exports, investment and consumption. If that shift takes hold, it will amount to the deepest restructuring of China’s growth model since the Deng Xiaoping era.

The Chinese model is frequently described in Europe as neither classical socialism nor free-market capitalism, but something else — a hybrid in which market mechanisms operate under firm political direction. Grzegorz W. Kolodko, one of the few Western economists who has tried to give this order a systemic name, coined the term “Chinism”: a syncretic arrangement that weaves together multiple forms of ownership with muscular macroeconomic policy. For European analysts, this hybrid possesses one decisive advantage: it can mobilize finance, regulation and industrial policy at a speed that liberal democracies rarely achieve. Europe does not consider the model universally superior, but views it as formidable — and that is the wellspring of its unease.

This recognition is already reshaping European policy. On March 4, the European Commission tabled its Industrial Accelerator Act, aiming to lift the share of manufacturing in the European Union’s GDP to 20 percent by 2035. Chatham House has labeled the emerging dynamic a “clash of mercantilisms”, noting that both China and the United States are placing greater emphasis on industrial policy and domestic resilience. In this shifting landscape, Europe faces growing external pressures. Slowly, and with visible reluctance, Europe is absorbing a lesson it long resisted: open markets alone cannot answer a world increasingly influenced by geopolitical considerations. That lesson is not simply about China; it is also about Europe’s need to correct its own strategic underinvestment and policy fragmentation.

Europe does not regard China as a failing economy — far from it. Many Europeans recognize that China’s strength lies in its ability to organize production, upgrade technology and sustain direction over the long haul.

At the same time, discussions in Europe increasingly focus on how different growth patterns interact in a changing global economy. In particular, questions are being raised about the balance between supply and domestic demand, as well as how these dynamics may influence global markets.

There is also growing attention to Europe’s own structural challenges, and how economic linkages with China will evolve in the years ahead.

Europeans have a habit of discussing China in tones that veer into moralizing. This is a mistake. China’s rise cannot be waved away as a distortion or filed under temporary deviations from some Western norm. It is the outcome of a distinct political economy that has delivered historic results. Europe’s job is not to lecture Beijing, but to see clearly China’s evolving role as both a partner and an important participant in the global economy, and to develop a more constructive and forward-looking policy response.

Waldemar Karpa

The author is an economist and the head of the Department of Economics at Kozminski University in Warsaw.

The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.

Contact the editor at editor@chinawatch.cn.

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