What the Chinese government thinks 2026 should look like: The Government Work Report to the National People’s Congress

As indicated in my post last week, the first major document that we should pay attention to as an outcome of the National People’s Congress is the Government Work Report delivered by Premier Li Qiang on the first day of the Congress. In contrast to the five-year plan, government work reports get issued every year during the National People’s Congress. Their purpose is to report on the views of the Chinese government on economic performance during the past year as well as goals and perceived challenges ahead. This year’s government work report is obviously heavily influenced by the drafting and launch of the new five-year plan and discusses the plans for the coming year under the auspices of the overall goals of the five-year plan.

What is striking in the government work report is an overall relatively strong domestic focus. The current geopolitical and geoeconomic situation is challenging and the Chinese government recognises that “geopolitical risks are rising” and “global economic momentum remains sluggish, while multilateralism and free trade are under severe threat”. However, these global threats are largely only briefly or indirectly discussed and the focus of the report is more strongly on domestic issues and tasks. In this context, four topics stand out in the planning of the Chinese government for the coming year.

The first is the topic of technological development and especially the further development of artificial intelligence. The Chinese government recognises that significant strides have already been made in the past year, especially in the development of open-source AI applications. While this is a path they would like to continue on, they also put a strong emphasis on the practical application of AI, especially in industry processes. In this context, the Chinese government speaks of technology and innovation integration. This is particularly interesting for businesses in the automation and machine building industries as it is likely to significantly affect their work and business models. Also, businesses in the more service-oriented industries might find themselves offered specific AI solutions from Chinese companies and have to decide on software environments and AI tools that they would like to work with. This will likely involve questions of regulatory compliance in their target markets and data protection.

Closely related to the question of technological development and AI innovation is the question of qualified staff. In the work report, the Chinese government is putting a strong emphasis on education of specialised staff within China but also on attraction of research and innovation talent globally. There is a reasonable possibility of global talent competition ensuing from this, especially because China’s own possibility of training homegrown talent will likely shrink in the future due to the demographic change under way.

The second topic that stands out is the one of green energy development. China is not only emphasising the goal of increasing its own energy efficiency and reducing carbon emissions. The government also emphasises the goal of technology development for example in regards to hydrogen power and green fuels. On the one hand, this contains the possibility of serious competition especially for countries and businesses that do themselves want to develop (or maintain) a competitive edge in these fields. We have seen this in the past in regards to solar panels and there is a possibility that this story will repeat itself in relation to other fields of green energy. For countries that do not have their own strong green technology industry, Chinese solutions will become an increasingly interesting solution on the market and they will have to take decisions on whom to cooperate with and whether and how to introduce Chinese green technologies into their own energy grids.

While these two topics are more technology-focussed, two other important topics in the work report strongly target domestic economic issues in China. First is the (long ongoing) attempt of the Chinese government to engineer a change of their growth model and become less export-dependent. The Chinese government wants to significantly boost domestic consumption to achieve this and the government work report claims that significant advances have been made in this regard. However, it also indicates that much of the increase in domestic consumption has been due to government-funded goods trade-in programs and similar stimulus measures (I wrote about this in relation to the recent Spring festival travel and the interpretation of consumer data around this) and such stimulus programs are also planned for the coming year to further support consumption. While this will likely to look good on paper, it is ultimately a government-driven consumption boost and has nothing to do with an underlying genuine change in consumer behaviour. In other words, based on the government’s plans, the outlook for a successful remodelling of the Chinese growth model in the upcoming year does not look promising and there will likely be more business as usual.

Finally, a fourth relevant topic that appears in the government work report is the topic of national security. However, in contrast to what might be expected, this focus on national security does not primarily involve international issues. Rather, the Chinese government heavily emphasises non-traditional security issues, especially food and energy security. Energy security should partly be seen in the context of China’s attempts to green its energy supplies but also refers to China’s still significant dependence on and vulnerability to global fossil fuel markets. The topic of food security has also been an ongoing issue for China because China’s arable land mass in relation to its population is relatively small. An important emphasis of the government work report is to increase grain production and yield and this is an area that could potentially be interesting for agritech companies wanting to cooperate with Chinese counterparts. Improving food security is not so much a winning topic for exporters of food products to China (as for example many Australian businesses do), but it could become an interesting area for any agritech companies working in the fields of fertilisers, modified and higher-yielding crops, improvement of farming technologies etc.

These four areas are topics that already stand out in the government work report for the coming year and these priorities will need to be further observed in the context of the new five-year plan and its implementation documents.