14th Five-Year Plan for Software and IT Services Development -- Comprehensive Review

Executive Summary

The "14th Five-Year Plan for Software and Information Technology Services Development" (MIIT Document No. [2021]180) was officially issued by China's Ministry of Industry and Information Technology (MIIT) on November 30, 2021. It serves as the programmatic document guiding the development of China's software and IT services industry during the 14th Five-Year Plan period (2021-2025). The plan opens with a foundational declaration: software is the soul of next-generation information technology, the foundation of digital economy development, and the key pillar supporting the construction of a manufacturing powerhouse, cyber powerhouse, and digital China.

The document provides a comprehensive review of 13th Five-Year Plan achievements: software business revenue grew from 4.28 trillion yuan in 2015 to 8.16 trillion yuan in 2020, with a compound annual growth rate of 13.8%; total profits grew from 576.6 billion to 1.068 trillion yuan; enterprises above designated size exceeded 40,000 with 7.047 million employees. It also candidly identifies five major challenges: fragile supply chains, shortcomings in key core technologies, insufficient depth of integration applications, weak international competitiveness of the ecosystem, and the persistent phenomenon of "valuing hardware over software." The plan sets an ambitious target of exceeding 14 trillion yuan in software business revenue by 2025, following a general approach of "filling shortcomings, forging strengths, and optimizing services."

Key Provisions

The plan establishes five major tasks constituting a complete industrial development strategy.

Task 1: Upgrading the Software Industry Chain. This is the plan's core content, covering the entire upstream, midstream, and downstream chain. Upstream, it mandates concentrated efforts on foundational software -- operating systems (desktop, server, mobile, automotive), databases (distributed, hybrid HTAP, shared-memory clusters), middleware, and development support tools. Midstream, it prioritizes breakthroughs in industrial software, including CAD, simulation, and industrial control software targeting CNC machines, integrated circuits, aerospace equipment, and shipbuilding. It simultaneously pursues forward-looking deployment in cloud computing, big data, AI, 5G, blockchain, and quantum information platform software. Downstream, it optimizes IT service systems. Seven dedicated "columns" (special focus areas) are established as key projects, including programs for foundational software gap-filling, emerging platform software strengthening, and EDA software development.

Task 2: Elevating Industrial Foundation Capabilities. This requires strengthening basic research in software engineering methods, programming languages, and core algorithms; reinforcing supply of basic components like OS kernels and development frameworks; improving quality and standards systems; promoting software cost measurement standards; and strengthening intellectual property protection.

Task 3: Strengthening Industrial Innovation Capabilities. It supports leading enterprises in forming joint innovation consortia with universities and research institutes, deepens "software-defined" concepts across computing, storage, and networking, promotes cloud-based development environments and intelligent development tools, and expands the information technology application innovation (Xinchuang) system.

Task 4: Stimulating Digital Development Demand. It comprehensively promotes application of key software products in office, manufacturing, finance, construction, energy, transportation, and agriculture sectors, drives industrial internet platform construction, and targets over 1 million industrial APPs.

Task 5: Improving Collaborative and Shared Industrial Ecosystem. It encourages large industrial enterprises to spin off software businesses to cultivate backbone software companies, promotes domestic open-source ecosystems, aims to build 2-3 internationally influential open-source communities, and advances the China Software City and Software Park programs.

Goals and Timelines

The plan establishes development targets across four dimensions:

Industrial Foundation: By 2025, breakthroughs in software kernels, development frameworks, and other basic components; 125 national standards in key areas; establishment of high-level software-hardware compatibility centers.

Industry Chain: Significant improvement in supply capabilities for foundational software and industrial software; over 1 million industrial APPs; continuously improving supply chain resilience.

Ecosystem: Over 100 enterprises with annual revenue exceeding 10 billion yuan; over 15 enterprises exceeding 100 billion yuan; 2-3 internationally influential open-source communities; over 10 high-quality open-source projects; 20 high-level China Software Parks.

Industry Performance: Software business revenue of enterprises above designated size exceeding 14 trillion yuan, with annual growth of over 12%; notable increase in revenue share from foundational software, industrial software, and embedded software.

Implementation Mechanisms

The plan establishes a five-pillar guarantee system. Organizational implementation includes strengthened inter-departmental coordination, improved industry monitoring systems, and enhanced central-local government collaboration. Financial and fiscal support encompasses national science and technology programs to fill industry gaps, implementation of tax incentives for software enterprises, encouragement of social capital to establish software industry investment funds, support for enterprises listing on the STAR Market and ChiNext, and development of intellectual property pledge financing. Talent development covers accelerated construction of specialized demonstration software colleges, deepened school-enterprise cooperation, establishment of a national software talent public service platform, and improved talent evaluation and incentive mechanisms. Security services include strengthened source code inspection and vulnerability management, enhanced open-source code security risk prevention, and industrial information security standards compliance. International cooperation supports enterprises in R&D, standards setting, and IP cooperation internationally, encourages leading companies to expand overseas markets, and attracts multinational corporations to establish R&D centers in China.

Industry Impact

This plan has driven comprehensive transformation across China's software industry. In foundational software, autonomous and controllable operating systems and databases became the industry's central theme. Huawei's HarmonyOS and openEuler, Dameng Database, KingBase, and other domestic products accelerated development, continuously expanding their application scope in government and critical industries. The plan's explicit focus on OS-database-middleware integration promoted ecosystem coherence rather than isolated product development.

In industrial software, the plan's breakthrough strategy channeled significant capital and talent into market segments long dominated by foreign vendors -- CAD (vs. Dassault, Siemens), CAE (vs. ANSYS, MSC), and EDA (vs. Synopsys, Cadence). Domestic firms such as ZWCAD and Empyrean Technology gained substantial development opportunities, though the gap with global leaders remains considerable in advanced capabilities.

In open-source ecosystems, the plan directly propelled the growth of the openAtom Foundation, provided policy support for domestic code hosting platforms like Gitee, and accelerated incubation of internationally influential open-source projects including openHarmony and openGauss. This represented a strategic shift from mere open-source consumption to active contribution and community leadership.

In industry structure, the Xinchuang (information technology application innovation) system's advancement reshaped China's IT competitive landscape, spawning a new industry chain centered on domestic software-hardware compatibility. The network of 13 Software Cities and 268 software parks formed a spatial framework for industrial clustering, with Beijing, Shanghai, Shenzhen, Hangzhou, and Nanjing maintaining leadership positions.

The plan's explicit criticism of the "valuing hardware over software" phenomenon has driven a societal reassessment of software value, contributing to improved pricing power and profit margins for software enterprises.

Amendment History

The plan was officially issued by MIIT on November 30, 2021, with full text released publicly on December 1, 2021. It remains currently effective with no amendments to date. The plan is a sector-specific implementation of the national software development strategy and the software industry provisions in the "14th Five-Year Plan for Digital Economy Development."

14th Five-Year Plan for Software and IT Services Industry