China’s 15th Five-Year Plan contains a formulation with no precedent for its explicit articulation in seven decades of national planning: build a financial powerhouse. Adopted by the National People’s Congress in March 2026, the plan does not treat finance as a supporting function for economic growth. It treats finance as a strategic instrument of technological capability.
The shift – from credit allocator to capital mobiliser – is the central financial commitment of the plan period. Whether China’s current system can become the system the plan demands is therefore the defining institutional question of the next five years.
Emphasis on modernised industrial system
The plan organises its financial architecture around a single concept: new quality productive forces – semiconductors, advanced manufacturing, artificial intelligence, biotechnology and clean energy. AI-related industries alone are projected to reach roughly Rmb10tn by 2030. That is the scale of capital the system is being asked to deploy.
The structural gap is stark. Direct financing accounts for roughly 31% of total social financing, while banks still represent around 0% of financial system assets. The plan’s response is architectural: increase the share of direct financing, develop five specialist finance categories – technology, green, inclusive, pension and digital finance – deepen the multi-tier capital market and actively expand equity, bond and derivative instruments. These are not adjustments to the existing system. They imply a fundamental rebalancing of it.
The 14th Plan led with technological innovation. The 15th places a modernised industrial system first – innovation follows. The sequencing is deliberate: translating breakthroughs into production capacity takes precedence over generating them. China is also stepping down its headline growth trajectory to between 4.5% and 5%. The signal is clear: technological productivity must now deliver what volume growth can no longer guarantee.
The 14th Plan pursued both objectives largely through instrument-level measures – reserve requirement reductions, re-lending facilities and targeted credit guidance. These operated within a bank-dominated financial architecture and left that architecture intact. The 15th Plan does not adjust the system from within; it changes it. The Central Financial Work Conference has long insisted that finance must serve the real economy. The 15th Plan converts that instruction into a structural demand rather than a policy tool. The distinction is critical: instruments change outcomes at the margin; architecture determines what outcomes are possible.
Redesigning China’s financial system
Two enabling conditions signal the scope of change. The first is the creation of a secure and efficient financial infrastructure, the precondition for deeper capital markets. The second is the steady development of a digital renminbi. The two are sequentially linked: currency at scale requires the infrastructure layer first. Both are connected to the instruction to accelerate Shanghai’s development as an international financial centre. Taken together, they describe a financial system being redesigned from the settlement layer upward – infrastructure, instruments and institutional architecture evolving simultaneously (Figure 1).
Figure 1. Financial architecture for technological development
| Financial system logic | Institutional mechanism | Role in innovation |
| Bank-led finance | State banks and policy banks allocate credit | Provides scale financing for industrial sectors |
| Market-led finance | Equity markets, venture capital and private capital | Prices technological risk and fund innovation |
| State-directed allocation | Policy guidance towards strategic sectors | Aligns capital with industrial strategy |
| Market allocation | Competitive capital markets | Supports entrepreneurial discovery |
Sources: NPC 15th Five-Year Plan Outline, International Monetary Fund Financial Sector Stability Assessment, Bank for International Settlements’ statistics, People’s Bank of China.
The tension is evident: the system must simultaneously preserve state-directed allocation while expanding market-based price discovery. These logics are not naturally complementary.
China’s institutional advantages are real. State ownership enables credit allocation at scale, and policy banks such as the China Development Bank have historically financed industrial expansion across entire sectors. That capacity is now being extended to technology-intensive industries. The STAR Market provides equity financing for technology firms whose risk profiles differ from traditional industrial borrowers. Yet the scale of these mechanisms relative to the financing demands embedded in the plan remains the critical constraint.
The challenge runs deeper than scale. Commercial banks are calibrated for predictable cash flows – collateral, covenant compliance and stable repayment cycles. They do not price technological experimentation; they finance proven returns. A financial system in which banks dominate the asset base faces a category problem rather than a capital shortage when asked to finance technological risk.
The regulatory dimension compounds the difficulty. Supervisory frameworks designed for collateralised lending do not extend naturally to technology investment, where collateral is limited and historical loss rates do not exist. This creates a regulatory gap. Recent IMF assessments, the International Monetary Fund’s 2025 Financial System Stability Assessment, and the 2026 Article IV consultation, all suggest that the regulatory framework must remain in step with the speed at which China’s financial structure evolves. Expanding equity markets, venture capital and hybrid financing are therefore a structural requirement for financing the sectors the plan identifies as strategically essential.
Financial transition and systemic risk
China’s financial system must undertake this transformation while managing inherited vulnerabilities. The contraction of the property sector has weakened developer balance sheets and eroded the land revenues on which many local governments depended. Debt accumulated through local government financing vehicles remains significant across several provinces. International assessments consistently identify the interaction between public-sector balance sheets and banking exposures as the central systemic risk in China’s financial system.
The 15th Plan, therefore, assigns the financial system a dual task: stabilise an inherited vulnerability while financing sectors defined by technological uncertainty and long investment cycles. These objectives pull in different directions. Risk reduction encourages caution. Innovation financing requires tolerance for uncertainty.
The plan does not reduce the role of investment in China’s growth model. It redirects that investment – away from property and infrastructure and towards technology-intensive industries. The mechanism is a transfer of financial risk across sectors and instruments. . Capital previously secured against property collateral, supported by predictable cash flows and well-understood loss rates, is now expected to finance long-horizon technological investment with uncertain returns and no collateral base.
The balance sheet changes. The exposure does not disappear. It transforms – and, and becomes harder to price, harder to provision for and harder to resolve if technological bets fail.
There is, therefore, a structural price embedded in the plan’s ambition. Other major economies built deep capital markets gradually over decades of expansion, crisis and institutional adaptation. China is attempting to compress that evolution into a single planning cycle while managing the legacy of a credit-intensive development model and navigating a more contested external environment.
Building financial capacity rather than inheriting it is the sovereignty premium the plan appears prepared to pay. In the plan’s own terms, a financial powerhouse is a system capable of pricing technological risk, sustaining long-horizon investment and directing capital towards strategic capability rather than immediate return. Whether China’s financial architecture can evolve quickly enough to perform that role is the central institutional question. The Fifteenth 15th Plan has placed for the decade. .
Udaibir Das is Vice Chair of OMFIF, Visiting Professor at the National Council of Applied Economic Research, Senior Adviser of the International Forum for Sovereign Wealth Funds, and Distinguished Fellow at the Observer Research Foundation America.
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