Beijing Announces New Measures to Drive Tech Self-Reliance
In late December, China announced new measures to foster innovation and tech self-reliance. CN Wire reported:
“China’s Tariff Commission announced a series of measures effective January 1, 2026, aimed at promoting domestic innovation and tech self-reliance. The changes include lowering import tariffs on key spare parts, adding domestic categories for smart bionic robots and bio aviation fuel, and applying below-MFN import tariffs to 935 items, alongside adjustments to import tariff rates and headings.”
Crucially, the tariff adjustments would ease input cost pressures, easing margin squeezes and boosting job creation.
Policy measures targeting price wars, the labor market, and consumer sentiment will be key for market trends in 2026.
Key Downside Risks to the Bullish Outlook
However, downside risks remain, potentially challenging the positive outlook. These include:
- Deteriorating US-China relations and a break in the trade war truce.
- Increased non-US tariffs on Chinese shipments.
- Beijing delays rate cuts and rolls out ineffective fiscal stimulus.
- Weakening demand for Chinese goods and services would narrow margins, curbing wage growth and fueling job cuts.
- Chinese housing market crisis escalates.
Despite these downside risks, China’s competitiveness in the AI race and increased self-reliance on chip manufacturing support the constructive short- to medium-term bias for Mainland Indices.
Additionally, markets remain confident that Beijing will lift domestic demand through subsidies and lower borrowing costs, while addressing deflation.
Medium-Term Outlook: Bullish, Hinged on Policy Support
Recent private sector PMIs supported improving sentiment toward China’s GDP growth prospects for 2026. Stimulus and improved external demand continue to counter weak domestic consumption. Further policy measures, targeting domestic consumption, would boost economic growth in 2026.
Given the current market dynamics and Beijing’s recent pledges, the outlook for Mainland China’s indices remains bullish.
CSI 300 Technical Outlook: Resistance Levels in Focus
Fundamentals aligned with bullish technicals in early trading on Tuesday, January 6. Viewing the daily chart, the CSI 300 traded well above its 50-day and 200-day EMAs, signaling a bullish bias.
A breakout above 4,800 would bring 5,000 into play for the first time since 2021. A sustained move through 5,000 would enable the bulls to target 2021’s all-time high of 5,931.
