With 2025 proving to be a tumultuous year for doing business in China, 2026 brings hope that there will be improvements in a number of areas. The forthcoming release of the 15^th Five-year Plan (15FYP) will set the tone of Chinese policymaking for the coming five years and drive much discussion in 2026.

Rebalancing—both of the domestic economy and international trade—will remain a top ask for businesses during the year ahead. The mismatch between domestic manufacturing output growth and the ability of the domestic market to absorb this output continues to pressure manufacturers to accelerate exports, leading to ever-increasing trade imbalances and growing trade tensions, as outlined in the Chamber’s recent supply chains report.[1] A gradual appreciation of the renminbi would promote rebalancing, helping to reduce trade tensions. However, China still needs to address several structural issues that affect its domestic economy.

Factory gate deflation has now persisted for over three years,[2] with the pace of consumption growth unable to keep up with production growth. Exports provide an off-ramp for some of China’s capacity, but surging volumes have resulted in unprecedented pushback from a number of markets.

This phenomenon is partly a result of involution, with China’s Government adopting a number of policies to address it, such as efforts to boost domestic consumption.[3] The 15FYP will likely continue to embrace similar measures, but time is needed before their impact becomes clear.

While it is positive that China has recognised the importance of addressing involution, early indications about the 15FYP outlined in the Chamber’s Position Paper 2025/2026 suggest that self-reliance will remain a top priority.[4] For many European companies, accustomed to long-standing issues such as localisation requirements, this is cause for concern.

While China is unlikely to reverse its efforts to achieve self-reliance in strategic areas, European companies continue to hope that these initiatives can be undertaken in a way that protects the role of market forces, allowing both foreign and Chinese companies to compete on a level playing field. This would necessitate a shift in the way that industrial policy is used, leveraging ‘new quality productive forces’ in a different way to the Made in China 2025 initiative, which saw highly strategic industrial policy used to promote technological leadership in key sectors without regard for maintaining a level playing field, contributing to involution.[5]

The 15FYP is likely to essentially be a continuity of the 14FYP, with major policy reversals unlikely. The new plan does, however, provide an opportunity for China to make small adjustments that could have a big impact on the country’s business environment, benefitting foreign and Chinese companies alike.

[1] Dealing with Supply Chain Dependencies: Challenges and Choices, European Chamber, 10^th December 2025, viewed 7^th January 2026, <https://www.europeanchamber.com.cn/en/publications-archive/1377/Dealing_with_Supply_Chain_Dependencies_Challenges_and_Choices>

[2] In November 2025, the Producer Price Index (PPI) continued to rise month-on-month, National Bureau of Statistics, 10^th December 2025, viewed 5^th January 2026, <https://www.stats.gov.cn/sj/zxfb/202512/t20251210_1962014.html>

[3] Curbing irrational competition to foster innovation, China Daily, 25^th August 2025, viewed 4^th January 2026, <https://global.chinadaily.com.cn/a/202508/25/WS68ab9abfa310851ffdb4fcba.html>

[4] European Business in China Position Paper 2025/2026, European Chamber, 17^th September 2025, viewed 7^th January 2026, pp. 6–7, <https://www.europeanchamber.com.cn/en/publications-archive/1373/European_Business_in_China_Position_Paper_2025_2026>

[5] Made in China 2025: The Cost of Technological Leadership, European Chamber, 16^th April 2025, viewed 7^th January 2026, <https://www.europeanchamber.com.cn/en/publications-archive/1274/Made_in_China_2025_The_Cost_of_Technological_Leadership>