China's National Economic and Social Development Five-Year Plan is a strategic policy document closely watched worldwide as it reflects the country's development direction and sends significant signals affecting global supply chains, international capital flows, and China's geopolitical positioning. The 15th Plan (2026–2030) is formulated amid heightened great power competition and unprecedented global uncertainty.
Approved by the National People's Congress in March 2026, the 15th Plan reflects a growth focus on quality, allowing slower economic expansion with a GDP target of 4.5–5% in 2026—lower than the previous decade’s average of about 6%, yet aligned with the medium-term goal of doubling per capita income by 2035 compared to 2020. Importantly, the plan targets labor productivity growth exceeding GDP growth, signaling a desire for efficient rather than merely rapid growth.
Regarding quality, the 15th Plan prioritizes future industries and technologies such as AI, semiconductors, biotechnology, and 6G. Innovation metrics have been raised, targeting high-value patents and increasing the digital economy’s value-added share to 12.5% of GDP by 2030, up from 10%. This shift reflects broader thinking—from focusing solely on chip and electronic parts production volume to measuring how digital infrastructure adds overall economic value.
Additionally, the 15th Plan emphasizes continuous economic linkages with other countries, focusing on trade relations and promoting two-way investment: attracting foreign investment in technology, renewable energy, and services, while supporting Chinese companies’ overseas investments, partly through the Belt and Road Initiative (BRI), China’s global infrastructure investment framework. China also seeks to expand roles in emerging industries like AI, data centers, digital services, and renewable energy.
These efforts aim not only to build international relationships and trade partnerships but also to establish long-term infrastructure, technology systems, and supply chains connected to China. This strategic imperative explains why overseas investment remains a government priority.
Since joining the WTO in 2001, China’s role as a major global producer and exporter has grown, leveraging cost advantages and price competitiveness. This has increased foreign income and sustained current account surpluses, resulting in high foreign exchange reserves. China has begun diversifying these reserves through overseas investments to generate economic returns. Simultaneously, the government promotes outbound investment under the Go Global policy to help Chinese firms access resources, technology, and global markets.
Currently, China faces a "strong supply, weak demand" situation due to slowing domestic demand, an aging population, and economic uncertainty. Households tend to save more and spend less, while production capacity remains high in sectors like steel, aluminum, solar panels, and electric vehicles, driving China to urgently seek new markets to absorb excess capacity.
This pressure intensifies amid trade barriers and geopolitical tensions since the US-China trade war began, prompting Chinese businesses to diversify production and investment abroad. In 2025, China's Ministry of Commerce reported record foreign direct investment of $174.4 billion, up 7.1% year-on-year, concentrated mainly in Asia's manufacturing sector.
Thailand has been and will remain a key destination for Chinese investment for three reasons.
First, Thailand meets China’s dual demand strategy simultaneously. Chinese companies view Thailand not just as a market but as both a production base and export hub for ASEAN. Thailand’s location connects CLMV countries, Indonesia, and Malaysia, allowing Chinese firms to manufacture in Thailand and export regionally from a single facility—a competitive advantage difficult for other countries to replicate in the short term.
Second is Thailand's long-accumulated industrial potential and infrastructure. Thailand has a comprehensive industrial ecosystem including supply chains, labor, industrial estates, and logistics infrastructure. These factors lower production base costs and enable faster establishment compared to countries lacking existing foundations.
Third are the investment promotion measures of the Thailand Board of Investment (BOI), which attract foreign capital through tax incentives. Regulatory facilitation and the Thailand FastPass program accelerate project approvals and unlock pending investments, especially in Thailand’s target industries such as clean energy, semiconductors, electric vehicles, digital, and AI.
These factors have driven continued growth of Chinese investment approved by the BOI, reaching 984 projects valued at 198.16 billion baht in 2025, a 13.6% year-on-year increase. Investment by Chinese firms in electronics, electrical appliances, machinery, metals, and basic materials continues to expand, with recent significant increases in electric vehicle and data center investments, aligning with China's industrial upgrading under the 15th Plan.
China’s structural economic problems show no short-term resolution. Excess capacity remains high, domestic demand weak, and trade barriers continue to obstruct direct exports. Overseas investment to establish production bases abroad remains a key option for Chinese firms. The 15th Plan also encourages Chinese companies in future industries to expand overseas investment, indicating ongoing investment flows. However, most Chinese overseas investment still depends heavily on China’s supply chains for raw materials, machinery, and specialized labor from parent companies, with some benefits flowing back directly to China's economy, potentially generating more value for China than host countries.
Under the 15th Plan, China focuses on future industries such as AI, digital, renewable energy, space, and biotechnology. Thailand must assess whether its infrastructure, labor skills, and investment policies can adequately support investment in these sectors.
However, Thailand may face greater limitations due to China’s efforts to retain advanced technologies domestically. For example, in the automotive industry, at the end of 2024, China’s Ministry of Commerce advised Chinese automakers to keep advanced parts manufacturing technology within China, delegating mainly assembly roles to overseas factories. If broadly adopted, Thailand may serve mainly as a downstream production base receiving only basic technology transfers, limiting its ability to upgrade to higher-value product design or development.
Amid growing Chinese investment, a key question is how much Thailand benefits. If Thailand accepts investment without conditions and production relies heavily on importing parts, raw materials, and technology from China, the apparent growth in investment value may not translate into significant value-added or widespread economic benefits within Thailand.
However, if Thailand leverages its bargaining power as a production base and market desired by China to set investment conditions linking benefits to technology transfer and systematically increasing the use of domestic raw materials, labor, and parts, then this investment wave could genuinely enhance Thailand’s industrial capabilities.
Thailand’s crucial challenge today is balancing openness to investment to maintain economic relations with protecting and upgrading its domestic industries. Successfully addressing this will stimulate the economy short-term and enhance Thailand’s competitiveness long-term.
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