China Annual Policy Summit will focus on technological transformation and bond issuance

Investing.com – China is expected to set a 2026 economic growth target of 4.5%–5.0% at the upcoming National People’s Congress (NPC), indicating policymakers may be willing to accept slower growth in exchange for long-term structural health.

The annual meeting will begin on March 5 and will serve as a key platform for Beijing to outline its new five-year plan. Analysts are closely watching for specific measures aimed at revitalizing the sluggish consumer market and managing the ongoing real estate downturn that has been dragging down the world’s second-largest economy.

This policy meeting could serve as a “new catalyst” for China’s stock market, which has performed modestly this year. Historically, if policy signals are clear, cyclical and real estate sectors tend to see the strongest gains within a month after the meeting.

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“Anti-Internal Competition” Movement and Tech Rotation

A major topic expected at the upcoming summit is the “Anti-Internal Competition” movement, launched in 2025, aimed at curbing the “brutal” price wars that have plagued industries like solar energy and electric vehicles. The government is pushing for a shift from solely focusing on output to emphasizing quality and innovation.

Early signs indicate this strategy is working, with solar supply chain prices stabilizing and stocks reaching two-year highs.

In the tech sector, investment patterns are also changing. Artificial intelligence remains a primary market driver, but focus is shifting away from traditional internet giants like Alibaba ADR (NYSE:BABA) and Tencent Holdings Ltd. ADR (F:00700). Instead, funds are rotating into smaller specialized companies seen as more direct beneficiaries of the AI revolution. Companies like MiniMax Group Inc (HK:0100) have benefited from this rotation.

Increasing Debt Issuance to Drive Growth

To support its growth targets and stabilize domestic demand, Beijing is expected to heavily rely on the bond market. Analysts anticipate the issuance of approximately 1.5 trillion yuan ($219 billion) in ultra-long special government bonds, up from 1.3 trillion yuan last year.

This fiscal stimulus aims to fund major infrastructure projects and boost consumption, although previous policies in this area have been less specific. However, some analysts, including Morgan Stanley, remain cautious. They warn that if the NPC fails to provide aggressive rescue plans for the real estate market, there is a risk of “policy disappointment,” as housing sales have yet to find a solid bottom.

The upcoming plan is also expected to adopt a bolder stance on internationalization of the yuan. Beijing has signaled its intention to challenge the dollar’s dominant global position.

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