Kaiser Kuo, Eric Olander, and Andrew Polk on China's 15th Five-Year Plan, ASEAN Realignment, and the Collapse of the Trade Truce

Andrew Polk

The big thing they're going to focus on is technology. Xi Jinping is all in on technological self-sufficiency — everybody knows that by now. It means investing resources to ensure that the basic technologies China needs to compete over the next five years are in place. That includes industrial upgrading: technology, as the Chinese see it, is not just about cutting-edge capabilities. It's about taking existing industries and making them work more efficiently through the industrial internet of things and all the connectivity that can genuinely boost productivity.

Ultimately, the throughline is high-quality productive forces. Technology, upgrading old industries, and productivity-led growth — that's going to be the thrust of the plan.

Andrew Polk

With both China and business, it's never either/or — it's always both/and. Xi Jinping's efforts to move China up the value chain and invest in cutting-edge and basic technologies have been central to his tenure. He's been on record for many years saying the strongest economy is not the one that grows the fastest but the one with the best technology. That push has been further galvanised by what's happening with the United States. I wouldn't be shocked if the 15th Five-Year Plan contains elements more specifically directed at fighting back against what they diplomatically call the "uncertain external environment" — which is hardly an oblique way to say: resisting US efforts to contain China's technological rise.

Andrew Polk

There seems to be a parallel effort: not only the five-year plan itself, but a separate new version of Made in China 2025 looking at how China wants to compete in various new industries over the next five to ten years. The Chinese absolutely intend to replicate Made in China 2025 — because they regard it as a total success. You see the lead they've built in automation. More or less everything set out in Made in China 2025 has come to fruition, so they have a lot of confidence that the next five years will follow the same pattern.

Andrew Polk

Employment is a huge issue for the party. Young people without jobs can create problems for governments in any country. A lot of what they're doing with automation is to replace jobs that older workers are vacating as the population ages — you need some automation to deal with an overall shrinking workforce. The additional problem is the imbalance: many young people coming into the economy don't want to work on manufacturing floors. Automating those roles continues to solve the problem of fewer people desiring those jobs.

The problem is that China isn't creating enough service-sector, higher-value jobs that young people actually want. The economy remains so heavily dominated by manufacturing and investment that it can't accommodate younger workers who want very different types of employment. There's no easy solution — structural unemployment will remain high for the foreseeable future until the economy adjusts to provide more of the jobs younger people want.

Eric Olander

One of the lessons I've heard Xi took away from the rise of Trump and European populism is: don't gut your industrial sector, because that leads to a populist backlash. So alongside the push for high-tech, he'll keep the industrial sector intact to guarantee employment and prevent people from being idled. Do you think those political calculations factor into the five-year plan?

Andrew Polk

I'd push back slightly on the premise. When I hear Xi talking about not wanting to hollow out the industrial sector, I don't hear him saying it's because people want those jobs in the way American blue-collar workers wanted factory work that let them buy a house and have a good life. When China says it, the meaning is: we don't want to be in the position the US and Europe are in — relying on others to produce goods for us. There's actually some validity to the concern that Trump identifies, even if his solutions are poor: outsourcing your entire pharmaceutical supply chain to another country doesn't always make sense, and China embodies exactly that strategic self-sufficiency rationale.

Andrew Polk

China's demographic situation is unique because it was caused by the one-child policy, which created a demographic dividend for decades and has now become a demographic drag — far fewer working-age people to support the elderly and children. But an ageing population is a challenge many countries face, and the history of pro-natalist policies is one of consistent failure: the problem is visible twenty years out but never seems urgent enough to act on until it's already upon you. China fell into exactly that trap.

The broader point is that demographics are 100% integral to the 15th Five-Year Plan. In a major report we have coming out, we frame it around the three Ds: demographics, debt, and deglobalisation. Those are the overarching challenges China faces over the next five to twenty years, and all the policies in the plan are effectively designed to address them.

Andrew Polk

We tend to describe a five-year plan like a State of the Union address — but on steroids. It's a statement of policy intent where every part of the government comes in to say what it wants to do in its area. So you get technology, industrial upgrading, social goals, environmental goals, targets for the auto sector — it's a big composite of different institutions' policy priorities.

There are some hard targets, particularly in the environmental space, but many goals aren't specific or binding — and often no one really knows which are which. It's an overarching statement of intent, but it also serves as the baseline policy document that everything else needs to tie back to for the five years it's active. If you're designing policy in real time in response to any development, you need to connect that policy back to the initial goals of the plan. It's a guidepost as much as a directive.

Eric Olander

They've completed negotiations for the China–ASEAN FTA 3.0, which is an evolution of their existing free trade agreement and a complement to the Regional Comprehensive Economic Partnership already in place. RCEP is a low-tariff trade mechanism across the Asia-Pacific, and this new FTA signals the urgency China is placing on expanding trade — a clear message Li brought to Kuala Lumpur.

The summit itself was fairly light on substance. Reputable China analysts like Jonathan Fulton noted it was more about Malaysia building momentum for its role in this space. But the US tariff issue hung heavily over everything. What I've been trying to explain to people in the US is just how traumatic these tariffs are for Southeast Asian countries: Vietnam faces 46%, Cambodia 50%, Malaysia 34%. They're negotiating, but the threat remains. China is leaning into that anxiety. And Li wasn't the only head of state in the region — Macron was also there, benefiting from the profound unpopularity of what Trump is doing in this part of the world.

Eric Olander

Colonialism for many of these countries is not an ancient memory. In our lifetime, Vietnam was under foreign rule — we just commemorated the 50th anniversary of the end of that war. Several things stood out in Prabowo's speech. First, Indonesia is the largest Muslim-majority country in the world and the largest market in Southeast Asia — this is a pivotal player in the great-power competition. For a leader at this moment, when most countries are trying to hedge between the US and China, to align with China in such a spiritually resonant way was striking.

Second, the mention of apartheid — at the very moment the US and South Africa are having their fallout, and in the context of Gaza, which matters enormously in Indonesia. Third, the invocation of shared colonial trauma: China itself was colonised by many of the same powers that colonised the global south, and that touchpoint is appearing far more frequently in Chinese diplomatic statements. It's an "us versus them" framing that people in the West are nowhere near as attuned to as they should be.

Andrew Polk

Ten years ago I saw these China–ASEAN meetings as sideshows that didn't really move the needle geopolitically. But China has invested in these forums and relationships consistently for twenty or thirty years, and now they do move the needle — because those countries are genuinely debating which side they're going to be on, or whether they can stay in the middle. The Singaporean prime minister just said it's becoming harder and harder to stay neutral. Those conversations — bilateral, multilateral, the China–ASEAN–GCC format — are carrying far more weight in this fracturing global economy than they used to.

Eric Olander

Don't get me wrong — a forum for grievance is itself substance in this era. BRICS is becoming a more important convening forum. One of its most meaningful contributions is enabling leaders like Prabowo to have conversations with Iran or Russia that would attract too much attention in a bilateral setting. In a BRICS context, that's possible.

That said, we're not going to see a BRICS currency. There is a BRICS payment system coming, but no monetary policy — India would never surrender monetary sovereignty to China. Compare the attention paid to BRICS summits versus the G20 and you see BRICS on an ascendant path, while legacy forums look increasingly feckless. S. Jaishankar, India's external affairs minister, made the point directly: India tried to get into the G7 and similar clubs, they wouldn't let India in, so India helped build its own. Countries that feel marginalised in the old institutions are building new ones.

Eric Olander

Macron visited Vietnam, Indonesia, and then went to Singapore for the Shangri-La Dialogue. His message throughout was trying to create space for France — and Europe more broadly — in what he calls a new coalition, positioning Europe as a relevant player in the Indo-Pacific. Trump essentially sees the world as China, the US, and Russia, with no role for Europe. Macron is trying to revive the idea of European relevance in Asia.

That message was warmly received in Vietnam, which has a free trade agreement with the EU. Many countries are actively looking to reduce their exposure to the US market so they're never again this vulnerable to tariff threats. There's genuine enthusiasm right now to deepen Asia–European ties, and Macron found a very willing audience.

Andrew Polk

It's very fragile. The Chinese are trying to have as many conversations with EU member states at as high a level as they can, and they're very much trying to play the moment against the United States — positioning themselves as the stable trading partner. And yet there are all kinds of sticking points. There's not real political will in Europe to pivot toward China. To the extent there's positivity, the Europeans don't want to fight a two-front trade war, so they're willing to put trade tensions with China on hold. But that doesn't mean they want to throw in their lot with Beijing.

The reporting suggests that part of US–EU negotiations may involve the EU taking a tougher line on China in exchange for tariff relief from the US. If they can turn down their trade war with the US and turn up their trade war with China, they're still not fighting two fronts at once. So that option is on the table.

Eric Olander

You have to look at it on two separate tracks. The EU-level engagement with China, which Ursula von der Leyen has led with a tougher line — bringing in human rights and trade issues — is very different from what happens in the bilaterals. When Macron, the Spanish prime minister, or Merz goes to China, the conversation is very different in tone. German industry needs the volumes it gets from China to sustain itself: BMW and Audi are both investing more to compete in the Chinese EV market. At the same time, there's worry that fully opening the door to Chinese cars could gut Europe's auto industry. These two tracks often have very different tones, and it's important to read them separately.

Separately, the European Chamber of Commerce just released its report on economic confidence among European companies operating in China, and it's at record lows — driven primarily by China's economic slowdown and by the increasing competitiveness of Chinese companies, not just by tariffs. European firms are struggling to eke out growth, let alone profit, in a market where Chinese competitors are taking a growing share of a slower-growing pie.

Andrew Polk

The rare-earth export controls are the clearest example of European companies becoming collateral damage in the US–China conflict. China put export controls on rare earths as part of its response to US tariffs — and applied them to all countries, not just the US. The Chinese have signalled they'll grant licences to European buyers, but the Mofcom bureau responsible is severely understaffed and the licensing process is extremely slow. So even though the intent is to spare European companies, the bureaucratic reality means they're being hit anyway.

Eric Olander

This was ordained to happen. We saw the same pattern in the first Trump administration, where a second trade deal was promised and never materialised. There's no way this could have been a quick fix. The politics are simply not set up for concession and compromise on either side. The TACO trade, for those not following: brokers were apparently saying Trump would always chicken out and trade accordingly on the assumption he'd back down from belligerent threats. He found out, got angry, and here we are. Getting rich off those dips may have been good while it lasted.

Andrew Polk

I think this thing was set up to fail from the beginning. It was always fragile on the US side. First, there's a genuine debate within the White House about whether to deal with China at all, and what form that deal should take. Inside the White House, there's a belief that the tariff issue can be separated from the tech and export control issue — that you can negotiate on trade while simultaneously escalating on technology. The Chinese do not see these as separate: they made their rare-earth export controls part of their response to US tariffs specifically to build leverage in that area.

My guess is the narrative on the US side centres on those rare-earth export controls. The rare-earth issue was one of the main things that brought the US to the table in Geneva. Two and a half weeks later, essentially no licences have been provided for US buyers of rare-earth magnets, because the Chinese licensing process is overwhelmed. I suspect people who want the deal to fail reached for that as their justification, and the TACO anger accelerated the timeline.

Eric Olander

Help us understand the factional politics in Washington. You have the Navarro nativist faction, grumblings in Congress about empty store shelves, and Elon Musk — now back in private industry — worried about rare earths and supply chains for Tesla and his robotics business. Which faction has the upper hand right now? Bessant is clearly in charge of the trade negotiations, but what does Bessant represent? And where does Rubio sit, given that State just announced they'll aggressively revoke visas for Chinese students with connections to the CCP?

Andrew Polk

There's a lot of chaos, and understanding who's up or down at any given moment is genuinely difficult. Every meeting I have in Washington with anyone close to the government says the same thing: it all comes down to what Donald Trump decides in the moment. This isn't like the last administration where you had people actively angling to pull policy in different directions. My impression is it's very much shooting from the hip — what does he think today about the China negotiations?

Trump cares about tariffs a lot — it's his one consistent policy position. He's letting Bessant take the lead, but Trump is the decider. Everybody else is trying to take their slice of China policy and run with it as far as they can — either to impress Trump or to operate under the radar while he's focused elsewhere. Commerce is moving on export controls on its own; Rubio at State is pursuing his agenda. The only question is whether they're each doing it to get a gold star from the president, or because they believe in it and know Trump won't engage with the details either way. Both answers lead to the same place: hawkish individuals pushing forward policies that undermine the more central goal of finding a lasting agreement with China.