Looking Ahead to the 15th 5Year Plan, China market policy update

The Core of Economic Work in 2025

Economic work in 2025 will adhere to the general principle of "seeking progress while maintaining stability," focusing on high-quality development. Efforts will be made to ensure stability in the real estate and stock markets while addressing risks in key areas. More proactive macroeconomic policies will be implemented to expand domestic demandand promote the integration of technological and industrial innovation, to lay a solid foundation for a strong start to the 15th Five-Year (2026-2030) Plan in 2026.

Fiscal policy will be more proactive, with the deficit ratio expected to rise to 3.5%-4%. New special bonds may exceed ¥4.5 trillion, supporting new urbanization and infrastructure development to drive consumption. Monetary policy is likely to include three rounds each of reserve requirement and interest rate cuts throughout the year, focusing on technology, green economy, and consumption. Special treasury bond funds are projected to surpass ¥2 trillion, targeting investments in critical sectors and recapitalization of state-owned banks.

The   meeting exceeded expectations in terms of Fiscal and monetary policy

Demand-Side Expansion
Measures to boost domestic demand include significantly stimulating consumption, particularly by leveraging new urbanization to drive both investment and spending. This will support the upgrade of major consumer goods like automobiles and home appliances. Over the next five years, new urbanization is expected to generate nearly ¥4 trillion in investments and ¥800 billion in consumption demand, with urbanization of rural migrant populations as a central focus.

Supply-Side Reform and Industrial Upgrading
Efforts will prioritize optimizing inefficient capacity, fostering emerging industries, and preparing for the future by enhancing productivity and promoting industrial innovation. Accelerating the transformation and upgrading of traditional industries will unlock economic potential. The 15th Five-Year Plan may emphasize key industries as drivers of future growth, with a focus on integrating technological innovation and building a modern industrial system.

Picture credit:qianzhan research

Several key industries such as Green Low-Carbon Industries, AI Large Models, Hydrogen Energy, Automotive-Grade Chips, New Energy Storage, Quantum Technology, Advanced Manufacturing, Genomics and Biotechnology, Low-Altitude Economy, and Productive Services are poised for significant growth to drive technological advancements, fuel economic transformation and sustainable development in the coming years.

Policy Implementation and Outlook
With fiscal and monetary policies working in tandem, domestic demand is expected to gradually recover, alongside deeper high-level openness. Despite ongoing deflationary pressures reflected in low PPI and CPI, comprehensive policy support is poised to drive economic recovery and unlock structural opportunities. The growth of the above key industries will bolster high-quality economic development in China and enhance its global competitiveness.

The effectiveness of these policies will depend on the scale of rate cuts and fiscal spending. Without substantial action, the market rebound may lack sustainability. To move beyond narrative-driven momentum, the capital market needs stronger policy implementation. This meeting’s guidance on political and economic priorities sets the tone for the upcoming Central Economic Work Conference in mid-December. As we await the conference and subsequent policy rollouts, expectations remain high.

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