Mid-March Update: Policy Direction in 2026 from China’s ‘Two Sessions’

China’s annual “Two Sessions”, the meetings of the National People's Congress (NPC) and the Chinese People's Political Consultative Conference (CPPCC), ended a bit over a week ago. The ‘Two Sessions’ are less about parliamentary work in the western sense and serve more as a notification and publishing link between the Communist Party of China (CPC) and the public. While policy formulation and explaining by the CPC is highly formulaic and cryptic to outsiders, the Two Sessions – still a highly ritualistic and choregraphed affair - give a clearer and more public-friendly version of political direction for the year.

This year’s meetings mark the first policy cycle of the new 2026–2030 planning period under China’s upcoming 15th Five-Year Plan (15FYP). The draft 15FYP was approved last week.

The immediate headlines were familiar, a cautious growth target and continued emphasis on industrial policy, but the deeper message emerging from the sessions is about how China intends to reshape its growth model over the next five years.

Below are three core themes emerging from the sessions, followed by five practical takeaways for businesses and investors, and how they connect to the regulatory developments covered in our latest update.

Three Big Themes Emerging from the Two Sessions

1. Growth Targets Are Lower

China set a 2026 GDP growth target of around 4.5–5%, which is lower than the “around 5%” formula from the previous 3 years and the lowest since 1991. It reflects both economic uncertainty and a deliberate shift toward “high-quality development” rather than headline growth.

This reflects several structural challenges policymakers openly acknowledged during the meetings:

• weak household consumption

• ongoing adjustment in the property sector

• youth unemployment pressures

• demographic decline

The leadership’s message is that moderate growth will continue, but the drivers must change. Rather than relying on the old formula of property development and infrastructure spending, Beijing increasingly sees productivity, innovation, and advanced manufacturing as the core engines of future growth.

Our overall take: the end of China’s hyper growth model is now rubberstamped and official.

2. Industrial Policy and Technology Self-Reliance Are Central

The discussions surrounding the upcoming 15FYP reinforced that China intends to double down on strategic technologies and industrial upgrading.

Policy priorities highlighted during the Two Sessions include:

• artificial intelligence and computing capacity

  
  

• semiconductors and advanced manufacturing

  
  

• bio-manufacturing and healthcare innovation

  
  

• green technologies and clean energy

Analysts following the policy debate note that the plan emphasizes industrial upgrading across entire supply chains: from upstream materials to downstream applications.

In other words, Beijing is not just supporting innovation at the margins; it is trying to rebuild entire technology and industrial ecosystems domestically.

Our take: we expect multiple replications of the electric vehicle (EV) playbook with deeply integrated value chains, strong government support and fierce competition for the top 2 to 3 spots to emerge in humanoid robotics, low-altitude economy, semiconductors and in biomanufacturing (roughly next 2-3 years). In these sectors one can already see the EV-like building blocks at work with local clusters, capacity build out and state funding, supply-chain localization, Chinese national standards, state finance, and guaranteed early demand.

3. Key Reform About “Investing in People”

One of the more subtle but important signals emerging from the policy discussions is a growing emphasis on human capital and social policy as economic policy.

Several policy discussions during the sessions emphasized:

• increasing incomes

  
  

• expanding the social safety net

  
  

• strengthening healthcare and education systems

This reflects a recognition among policymakers that sustainable growth requires stronger domestic demand and a more productive workforce.

Our take: don’t expect too much Western-style "classic" welfare spending to address problems like weak consumption and unemployment. The CPC leadership is not in favour of handing out too many cash benefits. Solutions will tend to be in structural and system adjustment to create incentives for change.

Five Practical Takeaways for Businesses

1. Expect Continued Regulatory Attention on Market Competition

The Chinese government is concerned about excessive competition and margin compression in key sectors, particularly in the EV sector and advanced manufacturing supply chains.

Recent regulatory activity around supplier payment practices and price competition reflects this.

2. Supply Chains Are Becoming a Strategic Policy Tool

The Two Sessions reinforced the idea that supply chains are now a core element of national security and industrial policy.

This connects directly to recent developments such as:

• export control tightening on dual-use technologies

  
  

• supply chain oversight in strategic sectors

  
  

• monitoring of technology transfers

These policy moves are part of a broader effort to secure domestic production capacity in critical industries and to be more resilient against external geopolitical shocks.

3. Digital and Data Regulation Will Continue Expanding

Policies discussed during the Two Sessions reinforce regulatory trends already visible in areas such as:

• AI governance

  
  

• facial recognition and ongoing personal data protection

  
  

• cybersecurity requirements

As China rapidly expands its digital economy, compliance expectations for technology companies will continue to evolve fast and probably in a more piecemeal manner.

4. Financial Tools Are Being Mobilized to Support Innovation

A notable new policy direction is the increasing use of financial-sector instruments to support industrial policy.

This includes initiatives such as:

• technology insurance

  
  

• targeted credit support for strategic sectors

The goal is to share risk between the state and businesses across the financial system to avoid uncontrolled funding.

5. More Stability by Being More Strategic

Perhaps the most important takeaway from this year’s Two Sessions is continuity.

There were no major policy shocks or dramatic stimulus announcements. Instead, the Two Sessions reinforced a long-term direction:

• steady growth targets

  
  

• stronger industrial policy 

  
  

• deeper technology regulation

  
  

• incremental structural reform

In short, Beijing appears committed to policy stability combined with strategic economic restructuring.

How This Connects to Our Latest Regulatory Update

The regulatory developments covered in our latest update fit closely within the broader policy themes emerging from the Two Sessions.

Several examples illustrate this alignment:

Policy Trend	Example from Regulatory Update
Market discipline in strategic industries	EV supply-chain payment regulations
Technology governance	AI and facial recognition oversight
Strategic supply chain control	dual-use export restrictions
Financial support for innovation	sci-tech insurance initiatives
Compliance enforcement	tax and overseas income reporting

The message from this year’s Two Sessions is not dramatic change but strategic consistency.

China’s leadership appears increasingly focused on re-engineering the foundations of economic growth; shifting from property-driven expansion toward innovation, technology, and human capital.