Tightened global trade and protectionism

In 2025, the US drove the shift with broad, high tariffs hitting everything from basic imports to steel, aluminium, and semiconductors.

US-China trade negotiations are unlikely to be a one-deal-fits-all, but multiple deals with long negotiations. This tariff-heavy trade landscape signals the emergence of a new paradigm that is likely to extend well beyond the current US administration.
 

China’s growth window

A short US tariff pause gave exports and manufacturing a lift, but the momentum faded once tariffs snapped back. US consumers pulled back, weighing on Asia’s growth outlook. China’s task in 2026 will revolve around managing volatility, keeping growth on track and shifting its production base.
 

The 15^th five-year plan

To reduce its exposure to US tariffs and weak external demand, China is pushing production and market expansion into Southeast Asia. This is part of a broader reset built into its 15^th Five-Year Plan.

The Plan targets stronger domestic demand, higher wages, better social services, and rural development. It leans heavily on ‘dual circulation’, meaning China wants its own consumers and its own tech to do more of the heavy lifting. The country is sitting on 25 trillion dollars in household deposits, so the spending power is definitely there.
 

Greener systems and smarter tech

China aims to build more of its own semiconductors, push artificial intelligence (AI) adoption, and expand clean energy and grid upgrades. It also plans to tighten carbon controls as it moves toward peak emissions in 2030 and neutrality by 2060.
 

Structural issues

Regardless of China’s ambitious goals, the structural issues haven’t gone away. A shrinking population, soft real estate demand, and overcapacity in areas like electric vehicles (EVs) and solar still weigh on the outlook. Regulators are responding with tighter rules and targeted support. Rate cuts will be cautious to avoid reigniting property speculation.

China wants to emerge from this transition as a more resilient, innovation-led economy. For investors, that creates opportunities across tech, clean energy, healthcare, and consumer sectors, but it also means weighing policy risk and geopolitical tension.
 

Read the full analysis on the CIO Perspectives