2026 – A new chapter in the story of China’s Miracle

I still can’t believe this.

In his New Year speech, Xi Jinping called on China to “write a new chapter in the story of China’s miracle.”

I had to read that sentence twice. Because my new book is titled China’s Next Miracle.

When I realized that, I actually woke up my wife to tell her that Xi Jinping had just mentioned my book. Her reaction was disbelief at first. Then she said: “This will be your busiest year ever.” Hard to imagine a better start to 2026.

But what struck me most wasn’t the coincidence. It was how closely this speech mirrors what I describe in the book — chapter by chapter. If you listen carefully to the full speech, the signal is crystal clear:

China believes it is ready for its next chapter — its next miracle.

Closing one chapter, opening another

Xi's New Year speech is not a ceremonial wrap-up. It marks a handover between two Five-Year Plans and the beginning of China’s next phase of modernization. China is closing the chapter of its previous economic miracle — built on speed, scale, and volume — and preparing the ground for something fundamentally different.

The retrospective on the 14th Five-Year Plan is strikingly confident. Economic output, technological capacity, defense capabilities, and overall national strength are explained as having reached a new level — one that translates into greater gain, happiness, and security for the Chinese people, earned through perseverance in challenging times.

China no longer views itself as a nation catching up, but as one moving into a new stage of development.

My prediction: 2026 marks the moment China stops looking outward for benchmarks — and starts setting them.

Innovation — the engine of transformation

When Xi turns to innovation, the emphasis is telling. This new chapter is about changing the China model itself, with innovation at its core.

He opens not with factories or infrastructure, but with AI models competing in a race to the top, followed by domestic chips, space exploration, energy projects, military capabilities — and, notably, humanoid robots. That ordering reflects a deeper shift. In China, AI is the starting point — not the story, as it is in the U.S.

Innovation and invention are no longer framed as policy ambitions or sectors to be supported. They have become the engine of China’s societal transformation.

The repeated reference to New Quality Productive Forces confirms this. China is moving from encouraging innovation to organizing the entire economy around it. I explain this shift in detail in the third chapter of China’s Next Miracle, where New Quality Productive Forces emerge as the backbone of China’s next growth model.

This is the Engineering State moving from experimentation to execution.

My prediction: from March 2026 onward, productivity, system efficiency, high-value patents, automation and technological capability will stop being aspirations and start being KPIs.

Industrializing innovation

One line in Xi’s speech is particularly revealing: he spoke about integrating science and technology deeply with industry.

That single sentence quietly confirms a major shift I describe in China’s Next Miracle. Innovation is no longer something that happens upstream — in labs, pilots, or R&D programs — before being handed over to the market. It is becoming continuous, embedded, and industrialized.

Innovation, in other words, is no longer separated from production. It is production.

This logic sits at the core of China’s master plan, visualized in the figure below. China’s innovation strategy does not start with disruption or moonshots. It starts by upgrading yesterday’s industries to secure today — raising productivity, efficiency, and resilience across the existing industrial base. From that foundation, China builds new growth engines, and only then seeks to disrupt the future.

This sequencing explains why so much innovative effort flows into manufacturing, energy, materials, logistics, healthcare, and infrastructure — sectors often overlooked by global media focused on breakthroughs and startups. As I explain in China’s Next Miracle, New Quality Productive Forces are not about replacing traditional industries, but about industrializing innovation within them.

In that sense, Xi’s call to integrate science and technology deeply with industry is not a slogan. It is the operating logic of China’s next miracle.

This is where a critical blind spot emerges. The graph from my book below makes this imbalance clear: global media attention fixates on China’s visible growth sectors and headline breakthroughs, while largely overlooking where China is investing most of its innovative energy — the systematic upgrading of traditional industries

Traditional sectors such as manufacturing, energy, steel, mining, telecommunication, construction, textiles, (petro)chemicals, electronics, healthcare, maritime, agriculture, transportation, and logistics are all being quietly re-engineered with AI, automation, data, and advanced processes. In China, AI is treated as industrial infrastructure — affordable, accessible, and applicable — rather than as a hyper-competitive race, as in Silicon Valley. The focus is not on discovery or hype, but on raising productivity, quality, and resilience across the entire industrial base.

The real risk for Western economies is not so much that China will outperform them in the next technological breakthrough. It is that many underestimate how decisively China is industrializing innovation at scale. That blind spot may prove far more consequential for Western industrial bases.

My prediction: By 2026, the distinction between “R&D” and “operations” in China will begin to blur — innovation in China will happen on the factory floor, not beside it.

A knowledge society

One of the most underreported parts of the speech is its focus on society and culture: protection of workers in new forms of employment, cultural confidence, and the creative role of Gen Z in building Chinese IP. These are not side notes.

They point to what I describe in the seventh chapter of China’s Next Miracle as “A Billion Brains at Work.”

China is preparing for a shift over the next decade: from an industrial society to a knowledge society, where productivity increasingly comes from cognition, creativity, and system intelligence.

While Chinese governance is often framed primarily as control, Xi’s speech places strong emphasis on inclusion — integrating workers, families, regions, generations into what he calls the “big family” of the nation. This framing, including references to Taiwan, signals how social cohesion is positioned within China’s next development phase.

The appearance of cultural IP such as Wukong and Nezha as global hits in Xi’s speech is symbolic in that sense. They represent the convergence of technology, culture, and creative human work — and will be among the most visible trends to watch in the years ahead.

The inclusion of humanoid robots reinforces this signal of “Created in China”. They embody the convergence of AI, hardware, and human labor — designed not to replace people, but to work alongside them and augment the human capability.

Young Chinese are increasingly proud of their culture, as tradition comes back into sync with modernity. Xi’s broader objective is to continue building a better life that can be enjoyed collectively — creating more space for travel, leisure, sports, and cultural expression.

China’s next miracle is not only technological. It is societal.

My prediction: In 2026, China’s new competitive edge will increasingly stem from the integration of human and machine intelligence, and from the convergence of manual and intellectual work.

One word will define 2026: inversion

Not a technological upgrade. Not a policy adjustment. But a Fosbury-flop of the innovation model itself.

China is not trying to win within the existing model. It is changing the model:

• from comparison to benchmark-setting,

• from innovation as industrial policy to innovation as the engine of the economy,

• from separated R&D to factory-floor innovation,

• from an industrial society to a knowledge society, where humans and machines increasingly work together.

That is why 2026 is not only the year Xi announces China’s next miracle. It is the year China starts operating the inverted model that will produce it.

The shift is already underway.

The only real question is whether others keep trying to jump higher using the old technique — or dare to make their own Fosbury-flop.