【Epoch Times October 10, 2026】On October 9, 2026, the Central Committee of the Communist Party of China and the State Council issued the “Opinions on Developing New Quality Productive Forces.” With only 17 days remaining until the Fifth Plenary Session of the 20th CPC Central Committee scheduled for October 26-29, the timing is noteworthy. China’s economy continues to face challenges such as weak domestic demand, contraction of private investment, and ongoing real estate crisis. Despite these issues, Xi Jinping still places emphasis on technological innovation, advanced manufacturing, and the concept of “new quality productive forces” at the core of economic development, setting it as a long-term goal.
This isn’t just about industrial policy; it also reflects Xi Jinping’s choice for the future economic growth model of China: to continue investing in high technology, aiming to drive overall economic transformation through technological breakthroughs and industrial upgrades. However, the key question remains – what is the probability of success in this high-stakes bet?
The Fifth Plenum provides a window to observe these issues. It’s not only about the policies that Beijing will propose but more importantly, it’s about whether Xi Jinping is prepared to adjust existing governance mechanisms and economic strategies when the Chinese economy is still facing challenges. Will he choose to continue along the path of political rectification and prioritizing technology?
In September 2026, the Chinese Communist Party officially announced the expulsion of Vice Chairman of the Central Military Commission, Zhang Youxia, and Commission member and Chief of the Joint Staff Department, Liu Zhenli, from the Party and the military. According to Reuters, the official accusations against Zhang and Liu include serious violations of discipline and law, corruption, and political misconduct. This event is a significant move in the ongoing rectification of the top military leadership and indicates that discipline inspections within the military are expanding to higher levels.
From an official perspective, such actions are part of the anti-corruption and discipline rectification efforts. However, from a political analysis standpoint, when rectification reaches senior military leaders, it is also necessary to observe its effects on the military leadership structure, cadre appointments, political loyalty requirements, and decision-making processes.
Therefore, the political rectification just before the Fifth Plenum should not be viewed solely as disciplinary issues of individual officials. It also highlights that Xi Jinping still places great importance on party discipline, cadre management, and military control. In a highly centralized decision-making political system, these arrangements not only involve anti-corruption efforts but also affect the implementation of central policies according to the leadership’s demands.
Apart from political rectification, the Chinese economy is also under pressure.
According to data released by the National Bureau of Statistics of China, from January to August 2026, national fixed-asset investment decreased by 7.2% year-on-year, private investment dropped by 10.1%; real estate development investment fell by 19.9%, the area of new commodity housing sales declined by 12.1%, and sales decreased by 13.0%.
In terms of consumption, the total retail sales of consumer goods increased by 1.1% from January to August, with a meager 0.4% growth in August alone. These figures indicate that despite certain industries showing growth, China as a whole is still under significant pressure in investment, consumption, and the real estate market.
Nevertheless, Xi Jinping has not abandoned the policy direction of driving economic transformation through technology. Artificial intelligence, semiconductors, new energy, robotics, high-end equipment manufacturing, among other areas, remain vital components of China’s industrial upgrading and technological self-reliance strategy. “New quality productive forces” have been introduced as a policy concept that integrates technological innovation, industrial upgrading, and productivity enhancement.
This choice has its policy logic. The CCP needs to find new growth drivers beyond real estate and hopes to enhance industrial competitiveness through technological breakthroughs while reducing reliance on traditional economic growth models.
However, one must question: to what extent can the current predicament of the Chinese economy be solved through the development of high-tech industries?
If the issues mainly stem from insufficient consumption, declining corporate investment willingness, real estate crises, and lack of confidence in future incomes among residents, then even with the continuous expansion of high-tech industries, it may not swiftly reverse the overall slowdown in economic growth.
Official CCP data shows that high-tech industries possess a certain growth momentum. In August 2026, value-added in high-tech manufacturing in China increased by 16.7% year-on-year, equipment manufacturing value-added grew by 12.1%, and overall value-added in large-scale industries registered a 5.2% growth. From January to August, investment in high-tech industries grew by 5.2%.
This illustrates that China still has development capabilities in certain high-tech manufacturing sectors and that policy guidance is effective.
However, on the other hand, while investment in high-tech industries has increased, it has not prevented the overall contraction in investment. In the same period, fixed-asset investment decreased by 7.2%, private investment dropped by 10.1%, and manufacturing investment declined by 2.3%. In other words, the increase in high-tech industry investment has not halted the ongoing contraction in overall investment.
This disparity is a crucial factor that cannot be ignored when evaluating Xi Jinping’s economic strategy.
High-tech industries can rapidly develop through government support, capital investment, and market demand stimulation. Yet, this growth may not necessarily translate into widespread employment improvement, rising household incomes, and a revival in consumption. Technological breakthroughs by tech companies do not guarantee simultaneous improvement in the business environment for general private enterprises.
Therefore, the issue isn’t whether China should develop high-tech industries but whether Xi Jinping is overly reliant on the high-tech industry and views it as the primary driver of overall economic growth.
If high-tech industries continue to expand while consumer demand remains tepid and private investment continues to decline, China’s economy may exhibit an imbalanced state. New industries may grow rapidly, but the overall economy might struggle to regain comprehensive momentum.
Xi Jinping’s insistence on investing in high technology is essentially aimed at establishing a new economic growth foundation for China through technological innovation, industrial upgrading, and productivity enhancement.
The development of the technology sector may not necessarily drive the holistic development of other industries. If growth is concentrated in a few large enterprises or specific industries, its impact on overall employment, household income, and private enterprise investment is limited. More importantly, technological breakthroughs take time. Even if China makes progress in certain fields, it doesn’t guarantee that emerging industries can quickly fill the economic gap left by the contraction in real estate and traditional investment.
This presents the risk that Xi Jinping faces with ongoing high-tech investments: policies may accelerate resource concentration but cannot ensure simultaneous occurrence of technological breakthroughs, commercial returns, and overall economic recovery.
In other words, Xi Jinping may have chosen the right long-term development direction for certain industries, but this alone may not solve China’s current economic challenges.
By examining political rectification alongside high-tech investments, a deeper question arises: Is Xi Jinping inclined to advance his political and economic goals through stronger central leadership, more centralized resource allocation, and stricter organizational management?
On the political front, the continued rectification of senior officials and military leaders reflects that discipline, loyalty, and organizational control remain vital aspects of governance.
Economically, the government focuses on industrial policies, capital guidance, and technological development strategies to concentrate resources in sectors considered to have long-term competitiveness.
Xi Jinping’s biggest risk isn’t solely about investing in high technology but rather about viewing the development of high technology as the main means to lead China out of its economic predicament while failing to concurrently address weak demand and loss of market confidence.
Without complementary support from the demand side and institutional aspects, the transition from localized success in the technology industry to a broader economic recovery seems highly unlikely.