Analysis

The CCP unveiled its strategy for China’s economic and social development over the next five years. The Fifteenth Five Year Plan (FYP), a bureaucratic mechanism remaining from China’s Maoist past, underscores the CCP’s key focal points for the near future. These include securing China’s national defenses against global uncertainty, boosting domestic consumption (促消费),;and championing Chinese tech innovation (新兴产业投资) to dominate global markets in key industries, namely in innovative technologies like AI, quantum computing, semiconductors, aerospace biotech, and robotics. Each of these points is a threat to US businesses, but the nuances are important for understanding how and why. 

First, it is worth noting the audience a FYP intends to reach. While a FYP is meant for multiple audiences simultaneously, the most important audience is arguably China’s domestic party bureaucracy. It is a document written by CCP elites to signal to provincial, municipal, and local levels of the party about the center’s priorities. This document not only signals where the party is going to spend resources, it is also a way for different levels of the party to see which projects (political, infrastructure, or otherwise) they should prioritize within their local arenas. 

This makes for a somewhat noisy messaging strategy when it comes to how US businesses should respond across different industries. One crucial area is that the CCP intends to invest heavily in China’s so-called private companies to “unleash” their potential (发挥民间投资潜力) as drivers of the party’s ambitious political objectives. CCP members at different levels of the bureaucracy will likely read the FYP as a call to become more involved in steering China’s private sector towards the center’s desired outcomes. Steering involves a combination of embedded party representatives in corporate boards, wielding shareholder power, enforced coordination with local state directives, financial incentives to align with party policies, and occasionally threats to keep business leaders aligned with the CCP. This renewed attention towards the “private” sector does not fundamentally change the fact that engaging with Chinese partners already equates to engaging with the CCP, but it does reinforce the increasing threat that Chinese firms pose to foreign companies.  

Second, in an attempt to predict the CCP’s shifting priorities, much analysis will focus on what is and is not included in this FYP compared to previous iterations. One persistent theme across FYPs, however, is the CCP’s emphasis on tech and innovation to save China from its myriad problems, ranging from economic sluggishness to squashing dissent. For US businesses, this is helpful insofar as it underscores which industries the CCP has in its sights for injections of government spending and forced integration with Chinese state funding bodies, universities, state-owned enterprises, and private companies. This means that US businesses in these industries will increasingly need to compete with Chinese competitors that enjoy the support of the entirety of China’s party-state.

PRC attention on key technologies also means that companies in those sectors will be under increasing pressure from the party to outperform their US competitors. In other words, those are industries where US companies will likely see the most aggressive competition and attempts at IP theft from Chinese firms. With the CCP’s announced relaxation of outbound investment, this competition will be global: even US businesses that do not operate in China will likely be affected. In short, a sector highlighted in the FYP signals where competition will intensify and where the CCP will inject its own ambitions into China’s private sector. 

While competition will likely get tougher for US businesses in the identified sectors, this does not mean that China has solved its economic problems. Bureaucratic divisions within the party still both reflect and create gaps between CCP ambitions and reality. One example is the introduction of various AI agents into government, business, and personal use. This has led to a haphazard adoption strategy that oscillates between local governments feeling the pressure to adopt agents like OpenClaw to signal that they are embracing new technologies, all while the central government is attempting to rapidly shut down such initiatives for fear of exposing cyber security vulnerabilities. While just one example, AI agent adoption is a neat encapsulation of the persisting problems that plague the CCP’s unwillingness to relinquish political power in favor of innovation. US businesses should take heart that for all of China’s planning, investing, subsidizing, and thieving, China’s competition can still be out innovated. 

Analysis

Any chance for an improvement in US-China relations is on pause. On March 17, President Trump postponed the planned summit with General Secretary Xi Jinping, “because of the war,” a stark admission that attacks against Iran take priority over China and what is arguably the world's most important relationship. Xi’s aspiration to show himself as a stable, secure global leader by leading a summit with Trump will have to wait. Despite the postponed spectacle of the summit, war in Iran is changing China and its relationship with the United States, in several important ways. 

For China, war in Iran is already throwing a metaphorical wrench into its carefully orchestrated political theater around its Two Sessions meetings. The unanticipated disruption to multiple necessary supply chains is triggering uneasy reactions in China. Announced restrictions on fertilizer, for example, highlights how the CCP is trying to mitigate potential shortages that could disrupt growth, provoke inflation, and cause widespread popular dissatisfaction. While the CCP generally tries to plan for contingencies and long term solutions to potential pain points, including restrictions to the Strait of Hormuz, the unfolding of war famously has a logic of its own, and cannot be predicted once started. Securing China’s assets in the region and ensuring continued flows of key materials will likely dominate closed-door discussions among Chinese party elites. 

While short-term substitutes of products that rely on transit through the Persian Gulf will take priority, the war in Iran will also likely harden US-China antipathy. The US’s willingness to use military force will scare some in Zhongnanhai who may have assumed that the purpose of the US military was more for deterrence than for changing regimes. That will likely inspire much ink about China’s aspirations for Taiwan and the extent to which China believes the US military would (or would not) defend the island. 

Economically, the CCP is also keen on minimizing potential future disruptions. Weaning China off of Iranian oil imports will likely join broader calls for “self reliance” (自力更生) that emphasize Chinese production using Chinese-sourced materials. This means that the CCP is incentivized to recreate certain supply chains or industry sourcing from within China. Moreover, industries that lessen reliance on oil, most notably renewable energy, will likely see increased government importance. Given the market saturation of the renewables sector, it is unclear whether this will translate into additional government support that could exacerbate oversupply, but it does mean that existing government support is here to stay. 

For US companies, the war has several implications. First, US-China relations will not ameliorate soon, so banking on closer business ties with China is inadvisable. Second, prices around the world for products ranging from hydrocarbons to fertilizers will increase as China seeks to secure its own supply chains through substitutions from outside the Middle East. Third, Chinese products will likely continue to flood global markets as the CCP aims to offset a potentially slower domestic economy with export growth. Collectively, war in Iran is therefore likely to make it more difficult for US companies to compete against their Chinese competitors.

Analysis

Between the Supreme Court ruling invalidating President Trump’s emergency tariffs, the US-led war in Iran, and now President Trump’s decision to delay his visit to China, markets are suffering from pricing uncertainty, oil shocks, and the lack of a clear, coherent US agenda.

One consequence of the Supreme Court’s ruling on US tariffs has been a sudden influx of shipments to the US combined with pricing uncertainties. Chinese export hubs have responded to the news with a mix of urgency and skepticism. On the one hand, exporters want to take advantage of the moment to get their products into the US market; on the other hand, exporters worry that if they ramp up production now, new tariffs may be imposed before the products arrive. Despite this mixed reaction, the two twin megaports on the west coast–Los Angeles and Long Beach–have seen trade with China drop by only about 10%, and the port authorities’ both expressed sanguine outlooks for 2026. The unstable tariff regime is also complicating pricing for exporters, as they are unclear how to value their products so that they can remain competitive while still earning adequate margins. This is compounded by the fact that it remains unclear whether or not the US government will return the $130B in tariff duties to the American importers and consumers from whom it collected them. For many companies, the return of such funds would be a major step toward relieving already strained operating budgets. 

The US government’s newly opened, unilateral investigation into 16 of its major trading partners for “excess industrial capacity” is also contributing to market uncertainty. Currently under scrutiny are China, Taiwan, Japan, South Korea and the EU, among others, and new tariffs could be implemented as early as this summer pending the outcome of these investigations. Beijing has retaliated by arguing that the US does not have the right to define “overcapacity,” although China’s rapidly growing foreign exports, which were up more than 20% in the first two months of this year, are not likely to help its case. Given President Trump’s stated desire to reimpose tariffs, it is highly likely that at least Chinese goods will face a new suite of duties in the coming months, and anticipation of those duties could lead to increased shipping costs as companies rush to move their products before they take effect. 

Prior to the cancellation of President Trump’s visit to China, Chinese Foreign Minister Wang Yi declared that 2026 was going to be a “big year” for US-China relations. In that spirit, while Beijing has declared the US’s war on Iran a mistake, it has reaffirmed its commitment to holding a Trump-Xi meeting. This is a stabilizing gesture but does nothing to resolve conflicts over the major destabilizing forces, such as rare earth, semiconductor, and AI policies.

In the meantime, US Secretary of the Treasury Scott Bessent has suggested forming a “Board of Trade” to help negotiate the reduction of tariffs and other duties on non-strategic goods. It is hoped by both the US government that the meeting will only be delayed a month, but this timeline is still under development. This desired timeline is all the more tenuous given the highly choreographed nature of such meetings on the Chinese side relative to the more spontaneous style of President Trump. Even if such a meeting happens–on any timeline–there are now so many complicating factors that we do not expect significant progress to be made on any of the critical issues, as managing the new status quo may take up the majority of any negotiations. 

Washington has adopted a somewhat self-contradictory strategy at present, insomuch as it wants China to be a pliant partner while simultaneously treating it as a dangerous adversary. Attempting to reinstate tariffs, canceling a state visit, and raising global oil prices by starting a unilateral war are all likely to make Beijing less likely to negotiate. At the same time, Washington wants China to give up more rare earths, buy more US agricultural products, and even buy US oil instead of Russian oil. How the administration intends to close that distance is unclear. Moreover, given China’s most recent five-year plan and its goal to develop self-reliance in the fields of advanced technology, delays in negotiations only give the CCP more time to shore up its domestic position. The result will likely be that negotiations will yield little change, supply chain shortages will persist, and renewed tariffs will be waiting to welcome us in summer.

Analysis

Meta’s acquisition of Manus last year has catalyzed how the CCP views tech talent. While the party has long viewed tech as a panacea for China’s political and economic problems, Manus’s acquisition is changing the PRC government’s policy towards retaining the most capable STEM employees and researchers. In some ways, this is to be expected. One of the biggest irritations for the CCP is that PRC’s most promising technologically skilled people, until recently, often left China for Silicon Valley, with US tech superiority built in no small part thanks to PRC brain power. Preventing talent from leaving is therefore not just important to the CCP, it is essential for China to out-compete the US. Moreover, the PRC likely mirror-images its own policies onto the United States; China recruits people for their access and ability to steal trade secrets; the United States recruits people for their brain power, not because of their access to secrets.

Meta pulled off its acquisition of Manus because Manus closed its Beijing operations and relocated to Singapore, a much more palatable jurisdiction for US tech companies compared to the PRC. “Singapore washing” is a common mechanism for PRC companies–including PRC state-owned or state-aligned companies–looking to disguise their national origins, most notably demonstrated by formerly PRC, now Singapore-based companies like SHEIN. The CCP’s issue with Manus therefore appears to be not so much that the company moved to Singapore, but that the company moved in order to sell to a US tech giant, which has triggered the party’s nationalist insecurity about its ability to retain expertise and compete in global markets. 

Meta’s acquisition of Manus means that Manus now sits largely outside of the CCP’s grasp. But this has not stopped the CCP taking action to prevent other PRC tech companies from trying to take the same Singapore-based path. On March 15, for example, rumors circulated that China’s National Development and Reform Commission was looking to “punish” former Manus employees who remained in the PRC. While these claims remain unproven, the chill sent through the tech industry is likely enough to force PRC-based companies to reconsider relocating outside the PRC. Such rumors may also signal the CCP’s firmer position against companies that have already relocated to Singapore, like SHEIN, which will likely face pressure to “reshore” to the PRC where it will be under greater control from the CCP. 

Punishing former Manus employees may also be a sign that the CCP is willing to prosecute individuals who previously worked for companies that fall foul of the party, including potentially employees of US tech companies operating in the PRC. A hard line against Manus employees may also signal heightened pressure from the central government to “persuade” PRC citizens working in the US tech sector to relocate back to China en masse, a move that would cripple Silicon Valley. 

Either way, Manus demonstrates that the CCP is getting serious about how it considers PRC-origin tech to be a function of China’s national security. US tech companies need to take note that they are not only at risk of being out-innovated, but they are, perhaps more existentially, at risk of losing the majority of their most-valuable employees.

Analysis

China’s approach reflects a total convergence of state priorities and private-sector capabilities—a modern iteration of mercantilist strategies used for centuries to erode competitor dominance. While this has been the case since the 1970s, the 15th Five-Year Plan more openly formalizes the erasure of the line between commercial expansion and strategic advancement.  As firms like Tencent transition from standalone apps to AI-driven operating systems, they are accelerating the construction of digital infrastructure designed to reduce reliance on foreign innovation. In this environment, routine corporate scaling remains a primary vehicle for  state-directed technological theft and “leapfrogging”, building upon the cyber intrusions and supply chain compromises by firms like Huawei and ZTE. 

The integration of autonomous AI agents into platforms like WeChat and TikTok has further scaled this decades-long “hoovering" of global data. These platforms consolidate messaging, financial transactions, and behavioral patterns into a unified environment, generating datasets that allow for ongoing "pattern-of-life" analysis. While China has analyzed such data at sca;e for over thirty years, the agentic model increases the velocity of observation and algorithmic influence. This creates a sustained informational advantage where the platform does not just watch user behavior more effectively but begins to mediate and predict it at a population scale.

In total, these dynamics mark a dramatic improvement in the efficiency of  China’s ubiquitous, continuous, system-level program of theft. The integration of platforms, data, and execution capabilities makes it increasingly difficult to distinguish between normal commercial activity and espionage. For Western firms operating in open markets, the challenge is no longer limited to preventing network breaches. It now extends to understanding how participation in these integrated digital trading systems systems contributes to long-term strategic exposure and the erosion of competitive advantages.