Advanced manufacturing becomes the defining pillar of China's 15th Five-Year Plan

China is entering a new phase of industrial restructuring as the 15th Five-Year Plan begins - a shift that reaches far beyond incremental upgrades. The coming transition is set to rewrite the country's growth logic, resource allocation framework and market rules. Advanced manufacturing is no longer framed as an emerging driver; it is expected to become the core foundation of China's next-stage industrial system. This transition implies a move away from scale expansion toward value creation, technology security and efficiency-driven development. Traditional industries must "re-engineer their engines," while strategic emerging and future-facing sectors compete for strategic ground.

1 | Why shift from scale to value?

The investment- and land-driven model that previously powered China's growth has reached its limits. Under the 15th Five-Year Plan, fiscal, tax and performance-evaluation frameworks are being recalibrated toward innovation and quality:

• Fiscal revenues are becoming less dependent on land sales, while more resources are directed toward equity investment and technological development.
• The tax system is being adjusted to stimulate consumption (e.g., shifting the collection point of refined-oil consumption taxes).
• GDP growth targets are being deemphasized, while "security," "quality," and "green development" increasingly serve as binding constraints.

Policy documents show a sharp rise in the frequency of terms such as "carbon," "innovation" and "green." Meanwhile, data already reveal a shift: high-tech and equipment manufacturing electricity consumption rose 5.9% in 2025, reflecting resource allocation moving toward advanced manufacturing.

2 | How will advanced manufacturing become the new foundation?

The rise of advanced manufacturing is not the growth of a single sector but the simultaneous formation of a new industrial matrix through traditional industry transformation, emerging industry clusters and future industry deployment.

Source: Compiled by GL Consulting

Traditional industries: Can "old pillars" generate new momentum?

A: Yes - and the potential is substantial.

Government estimates suggest that technological upgrades and equipment renewals in chemicals, machinery, shipbuilding and related sectors could unlock close to RMB 10 trillion in market opportunities. The key is shifting from capacity expansion to technological upgrading.

For example, petrochemicals can leverage CCUS, green hydrogen and cogeneration to eliminate inefficient capacity, while moving toward higher value-added segments such as electronic chemicals and high-end polyolefins. Traditional industries are not being abandoned; they are expected to serve as the industrial "chassis" supporting advanced manufacturing.

Emerging industries: How will clusters take shape?

Emerging sectors - including new energy, new materials, aerospace and the low-altitude economy - are shifting from isolated breakthroughs to integrated ecosystems. Two forces drive this:

• Demand defining supply. Large-scale downstream demand (e.g., mass production of eVTOL aircraft) is accelerating upstream clustering of composite materials, high-precision sensors and other inputs.

• Ecosystems centered on leading enterprises. "Chain-leader" firms guide supply-chain agglomeration, enabling rapid clustering within key regions. Beijing-Tianjin-Hebei, the Yangtze River Delta and the Greater Bay Area are becoming innovation hubs, while the Yangtze Economic Belt and Sichuan-Chongqing region are emerging as industrialization anchors.

Source: Compiled by GL Consulting

How will future industries seize the initiative?

Quantum technology, biomanufacturing, hydrogen energy, nuclear fusion, and brain-computer interfaces are identified as key future deployment directions. The development logic is "technological breakthroughs + scenario-driven applications," allowing space for trial-and-error to build long-term competitiveness, starting with integrated circuits, industrial mother machines and foundational software.

3 | How will policy, capital and market players work together?

Industrial restructuring requires collaboration among three forces:

• Policy sets "intelligent, green, and integrated" as mandatory orientations.
• Capital: Funding is shifting away from high-energy, high-leverage projects toward tech-focused and green finance.
• Market participants:

1. State-owned enterprises: infrastructure, standards, and large-scale projects (e.g., renewable energy bases, hydrogen transport networks).
2. Private enterprises: specialization and innovation in niche segments.
3. Foreign firms: technology inflow and alignment with international norms.

A unified national market combined with differentiated regional layouts aims to avoid resource over-concentration and support balanced development.

4 | How should enterprises position themselves amid the transition?

• Industry leaders: Lead major technological breakthroughs, drive capacity replacement, secure green-transition pilots and preferential financing, and take positions in standards-setting.

• SMEs: Shift from expansion to specialization, providing indispensable components, materials and solutions to leading firms (e.g., specialty additives, energy-saving equipment, waste treatment technologies).

• Foreign enterprises: Use platforms such as Hainan's free-trade environment to introduce capital and technology, participate in localized high-end manufacturing, and comply with emerging regulatory frameworks.

Advanced manufacturing is more than an upgrade

China's upcoming restructuring is fundamentally a shift from factor-driven to innovation-driven growth. Over the next five years, the real upside lies in three capabilities: identifying viable technological pathways for industrial upgrading, building ecosystems aligned with downstream demand, and capturing positions in next-generation industries.

The full report dives deeper into:

• Industry-specific upgrading roadmaps
• Regional investment maps for emerging industries
• Subsidy application pathways for enterprise technology breakthroughs

The above content is the major conclusions and highlights extracted from China (Energy Transition) Policy Perspective produced by GL Consulting. Click the hyperlinks for the full text or email glconsulting@mysteel.com.