Outlook 2026 Series | II. China’s 15th Five-Year Plan Kicks Off: Keys to the Red Supply Chain’s Breakthrough
Since 2025, onshore and offshore Chinese equities have shown striking momentum. At the same time, 2025 has become the pivotal breakout year for Chinese technology — global capital is actively reassessing China’s competitiveness in the technology sector. Looking ahead to 2026, under the dual constraints of US trade restrictions and tech sanctions, will the Red Supply Chain continue accelerating its breakout—or stall? As China vigorously pushes its campaign against “involution,” can long-standing structural issues—excess investment and insufficient consumption—find a policy turning point? In the second instalment of our Outlook series, we examine China’s evolving trajectory.
Key Takeaways:
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In China’s upcoming 15th Five-Year Plan, Beijing calls for securing the “commanding heights” of technology and developing new quality productive forces. Why is 2025 considered the critical year for China’s technological breakout?
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China’s use of rare-earth restrictions aims to buy time in the tech race—but how long can this window remain open?
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Hainan Island will enter customs closure at year-end. China is constructing a new Free Trade Port in stark contrast to Trump’s global tariff policies.
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China’s chronic issues—excess investment, weak consumption—stem from multiple structural constraints. Are we seeing signs of policy reform?
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For China to reach the income levels of moderately developed economies by 2035, how fast must long-term economic growth remain?
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Throughout this year, our analysis of China’s markets and fundamentals emphasized several turning points: In March we were the first to point out that extreme pessimism toward Chinese assets had been fully priced in, making China the top destination for global capital rotation. By mid-year we identified clear turning signals in capital-flow indicators. In July we highlighted “new quality productive forces” and the fight against involution as the core reform themes. In September we observed tangible progress in China’s technology breakout. Year-to-date through 8 November, the CSI 300 has risen 18.9%, the Shanghai Composite has climbed 19.3% — returning above 4,000 for the first time in a decade — while the tech-heavy Hang Seng Index in Hong Kong has surged over 30%. All have outperformed the S&P 500’s 14.4% gain.
At the same time, China recently published the draft guidelines for its 15th Five-Year Plan, revealing a shift in its 2025 policy logic—from heavy regulation to confidence stabilization, fiscal stabilization, tech development, and structural adjustment:
- Technology & Industrial Strategy: A push to seize technological high ground and transform China from a follower to a leader, with a special emphasis on
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