CICC: The "14th Five-Year Plan" proposal clarifies the medium and long-term construction direction of the capital market, with a focus on digital technology, space economy, high-end manufacturing, and other fields

According to the Zhitong Finance APP, China International Capital Corporation (CICC) released a research report stating that on October 28, the "Suggestions of the Central Committee of the Communist Party of China on Formulating the 15th Five-Year Plan for National Economic and Social Development" and its explanations were published, systematically elaborating on issues such as the status, guidelines, goals, and tasks of the "15th Five-Year Plan." The "Suggestions" clarify the medium- and long-term construction direction of the capital market, and China's capital market is expected to show a "long-term" and "steady" trend. In terms of industry and allocation, in conjunction with the "15th Five-Year Plan" suggestions and the development plans of some industrial policy documents in recent years, the bank believes that during the "15th Five-Year Plan" period, key areas to focus on include digital technology, space economy, high-end manufacturing, domestic consumption, and biotechnology.

CICC's main viewpoints are as follows:

Macroeconomics: Enhance Supply, Boost Demand

1. New Requirements in the New Environment

Connecting the past and the future, a special status. The "15th Five-Year Plan" holds an important position in the process of basically achieving socialist modernization by 2035. By 2035, the per capita GDP is expected to reach the level of moderately developed countries, while the explanation of the "14th Five-Year Plan and the 2035 Long-term Goals" mentions that "China's economy has the hope and potential to maintain long-term stable development, reaching the current high-income country standard by the end of the '14th Five-Year Plan,' and it is entirely possible to double the total economic output or per capita income by 2035." According to the standard of doubling the economic output by 2035 compared to 2020, the bank estimates that the average annual GDP growth rate from 2026 to 2035 may need to reach around 4.4%, thus the economic growth during the "15th Five-Year Plan" still needs to remain within a reasonable range.

Compared to the "14th Five-Year Plan" period, several important changes have occurred in the development environment of the "15th Five-Year Plan." For example, (1) breakthroughs in technological innovation; (2) downward adjustment of the financial cycle; (3) frequent geopolitical conflicts and profound changes in the international balance of power. Correspondingly, (1) technological innovation has made further progress, emphasizing scale and industrialization; (2) the importance of expanding domestic demand has increased, with the "Suggestions" emphasizing that domestic demand is a strategic foundation, and the State Council Information Office press conference also emphasized that major economies are dominated by domestic demand, with the market being the most scarce resource in today's world. The "Explanation" also proposed goals such as a significant increase in the household consumption rate and a continuous strengthening of the role of domestic demand as the main driving force for economic growth; (3) more confident and autonomous opening up to the outside world, emphasizing proactive, two-way, and institutional opening.

The order of tasks and word frequency also reveal new changes. From the order of tasks, compared to the suggestions of the 14th Five-Year Plan, industry has replaced technological innovation as the primary task, emphasizing the importance of a systematic industrial foundation under the transformation of old and new driving forces, while opening up and people's livelihood are prioritized. In terms of word frequency, development remains the highest, highlighting the idea that development is the primary task; words like technology, industry, modernization, national defense, and high quality appear more frequently, underscoring the requirement for further optimization and upgrading of the supply side; words like people's livelihood, growth, consumption, and demand appear more frequently, also expressing the urgency of expanding domestic demand.

2. Higher Requirements for Technological Innovation, Greater Emphasis on Industrial System Construction

The construction of a modern industrial system must enhance efficiency and strengthen the security of the industrial chain. The "Suggestions" point out that "a modern industrial system is the material and technical foundation of Chinese-style modernization." The bank believes that during the "15th Five-Year Plan" period, "the world is undergoing a century of changes at an accelerated pace," and the importance of efficiency and security in the industrial chain is more prominent, with the focus on building a modern industrial system being to enhance the efficiency and security of the industrial chain The report of the 20th National Congress of the Communist Party of China first proposed the concept of a "modern industrial system" and the requirement to "build a modern industrial system," listing it as an important part of accelerating the construction of a new development pattern and promoting high-quality development in our country. The Central Economic Work Conference in 2023 pointed out that "leading the construction of a modern industrial system with technological innovation" emphasizes the importance of efficiency. In 2023, in "Several Major Issues in Current Economic Work," General Secretary Xi Jinping stated that building a modern industrial system should "enhance the resilience and security level of the industrial chain and supply chain," highlighting safety.

In terms of safety, the "Suggestions" emphasize the importance of a complete industrial chain. In February 2024, during the 11th collective study session of the Political Bureau of the Central Committee of the Communist Party of China, General Secretary Xi Jinping proposed three directions for building a modern industrial system: "transforming and upgrading traditional industries, cultivating and expanding emerging industries, and planning and constructing future industries." The "Suggestions" pointed out that "constructing a modern industrial system with advanced manufacturing as the backbone" requires both "cultivating and expanding emerging industries and future industries" and "optimizing and upgrading traditional industries." Regarding traditional industries, General Secretary Xi Jinping noted that "developing new quality productivity does not mean neglecting or abandoning traditional industries." The "Suggestions" clearly outline the development direction of traditional industries within the modern industrial system, including "consolidating and enhancing the position and competitiveness of industries such as mining, metallurgy, chemicals, light industry, textiles, machinery, shipbuilding, and construction in the global industrial division of labor." For emerging industries, the "Suggestions" identified strategic emerging industries such as new energy, new materials, aerospace, and low-altitude economy. For future industries, the "Suggestions" emphasized quantum technology, biomanufacturing, hydrogen energy and nuclear fusion energy, brain-computer interfaces, embodied intelligence, and sixth-generation mobile communication, adding hydrogen energy and nuclear fusion energy, and brain-computer interfaces compared to the 2025 government work report.

In terms of efficiency, comprehensively enhance independent innovation capabilities and seize the high ground of technological development. The "Suggestions" further refined the expressions from the "Communiqué of the Fourth Plenary Session of the 20th Central Committee of the Communist Party of China," deploying the direction of technological innovation work during the 14th Five-Year Plan period from four aspects: core technologies, industries, talents, and digital economy. Compared to documents such as the "Decision of the Central Committee of the Communist Party of China on Further Deepening Reform and Promoting Chinese-style Modernization," there are some new proposals: In terms of core technologies, the "Suggestions" emphasize "taking extraordinary measures to promote decisive breakthroughs in key core technologies in key areas such as integrated circuits, industrial mother machines, high-end instruments, basic software, advanced materials, and biomanufacturing through the entire chain." On one hand, there are "extraordinary measures" and "decisive breakthroughs," and the bank expects that under the geopolitical competition pattern, the investment and methods for tackling these key core technologies will be further strengthened and innovated. On the other hand, "the entire chain" indicates that the bank expects to comprehensively promote technological breakthroughs at the "bottleneck" nodes along various industrial chains. In terms of industries, "planning and constructing concept verification and pilot verification platforms" aims to fill the critical gap between laboratory samples and industrialized products through the construction of specialized platforms, enhancing conversion efficiency and success rates. In terms of talents, the "Suggestions" propose "building globally influential education centers, scientific centers, and talent centers," emphasizing the "integrated promotion of education, technology, and talent development." In terms of the digital economy, the "Suggestions" require the "comprehensive implementation of the 'Artificial Intelligence+' initiative," emphasizing the need to "seize the high ground of artificial intelligence industry applications and empower various industries in all aspects," highlighting the importance placed on the artificial intelligence sector.

3. Improving people's livelihoods and promoting consumption are key to expanding domestic demand

The "Suggestions" clearly state that "the resident consumption rate should be significantly increased." The institution believes that consumption can be boosted from both the supply side and the demand side. Supply-side measures aim to streamline systems and mechanisms, enhance supporting infrastructure, and increase quality supply to unleash consumption potential. Demand-side measures focus on promoting employment, increasing income, stabilizing expectations, enhancing residents' consumption capacity, and removing restrictive measures that limit consumption on the demand side. The institution believes that supply-side measures to promote consumption can be summarized into three policy areas:

Improving the institutional mechanisms to promote consumption. This includes relaxing access ("expand service consumption with a focus on relaxing access and integrating business formats"), for example, in the fields of health, education, medical care, culture, and finance, further access relaxation may be implemented to allow more quality entities to participate. Optimizing management ("establish and improve management methods that adapt to new business formats, new models, and new scenarios of consumption"), for example, optimizing policies related to the approval of cultural products such as television and gaming, land approval for leisure and entertainment venues, maritime operations, airspace usage approvals, and large-scale cultural and sports event approvals, which will help release consumption supply that has been suppressed by regulatory policies.

Increasing supporting infrastructure in the consumption sector. Effective investment may be more inclined towards the consumption sector ("increase the proportion of government investment in people's livelihoods," "improve the layout of infrastructure and public service facilities"), for example, hospitals and clinics (medical services), schools and childcare (educational services), age-friendly and barrier-free renovations of public facilities (elderly care services), supporting facilities for tourist attractions (cultural and tourism services), as well as infrastructure for consumption such as parking lots, charging piles (new energy vehicles), civil airports/helipads (private jets), and yacht docks (yachts).

Expanding quality supply. The "Suggestions" propose "expanding the supply of quality consumer goods and services." In light of the policies introduced this year, the institution believes that policies may support the development of quality consumption supply through financial and monetary policy tools such as loan interest subsidies and relending, especially in the fields of elderly care, childcare, health, housekeeping, and cultural and sports services. At the same time, by "strengthening brand leadership, upgrading standards, and applying new technologies to promote the expansion and upgrading of commodity consumption," for example, developing green consumption and smart consumption.

Demand-side measures to promote consumption can also be summarized into three policy areas:

Strengthening employment and income distribution. The "Suggestions" propose "promoting high-quality and full employment" and "establishing an employment-friendly development approach," emphasizing the need to safeguard and improve people's livelihoods during development. Regarding labor income, the "Suggestions" propose "improving the income distribution system," "implementing a collective wage negotiation system, improving the mechanism for adjusting minimum wage standards, and strengthening macro guidance on enterprise wage distribution." The institution believes that wage income is a major component of residents' disposable income, and through adjustments to the wage system, it is beneficial to reduce the wage income disparity, improve the fairness of labor income distribution, and enhance the consumption capacity of low-income groups with a high propensity to consume Guaranteeing and Improving People's Livelihoods. The bank believes that "benefiting people's livelihoods and promoting consumption" are closely linked, possibly referring more to the social security sector, such as education, elderly care, healthcare, childbirth, and upbringing. By "increasing government funding for livelihood security expenditures," it aims to "enhance the inclusive policies that directly reach consumers." Existing policies such as childcare subsidies and reductions in preschool education fees may be further deepened ("steadily expanding the scope of free education"), and in the future, there may be further increases in pension standards ("improving the mechanism for determining and adjusting benefits, gradually raising the basic pension for urban and rural residents") and raising the individual income tax deduction standards ("utilizing childcare subsidies and personal income tax deduction policies to effectively reduce the costs of childbirth, upbringing, and education for families").

Clearing Unreasonable Restrictions on the Demand Side. For example, "clearing unreasonable restrictive measures on consumption such as automobiles and housing" may refer to the purchase restrictions on cars and housing in certain cities; "implementing paid staggered vacations" allows residents to more fully release their demand for tourism and other service consumption.

4. Opening Up More Actively and Autonomously

Steadily Expanding Institutional Opening-Up to Promote Reform and Development through Openness. In the "14th Five-Year Plan" outline, "implementing high-level opening-up" is positioned in the twelfth section, while in the "Suggestions," "expanding high-level opening-up" is ranked seventh, indicating a significantly higher priority. The "Suggestions" also added the word "active" to "expand autonomous opening-up" in the "Decisions" of the 20th Central Committee's Third Plenary Session, reflecting new demands for policy in light of changes in the international environment.

The "Suggestions" expanded the expression of the "Communiqué," broadening high-level opening-up from four aspects: autonomous opening, innovative trade development, bilateral investment, and the "Belt and Road" initiative. The "Suggestions" clarified that "expanding market access and open fields with a focus on the service industry" emphasizes "promoting balanced development of imports and exports." The "Suggestions" proposed "improving export control and security review mechanisms," which places greater emphasis on security compared to the "Decisions" of the Third Plenary Session that mentioned "improving the export control system and trade relief system." The "Suggestions" proposed "guiding the reasonable and orderly cross-border layout of industrial and supply chains," and the bank believes that there is still considerable room for domestic and foreign enterprises to go abroad, but the pace and extent should be reasonable and orderly.

Opening has been elevated to a more prominent position, and financial opening will play an important role in "autonomous opening." The bank believes that the disparity between China's financial strength and real economy strength has become a focus of policy attention that needs to be clearly addressed. As of 2024, China's GDP accounts for about 17% of the global total, but as of July 2025, the share of the renminbi in SWIFT global payment currencies is less than 3%, forming a stark contrast with the United States. The bank believes that through further financial opening, achieving a higher status in the global financial system and enhancing China's own financial soft power will become an important direction of effort during the "15th Five-Year Plan." The bank has observed that the attitude towards financial opening in this draft of the "15th Five-Year Plan" outline is significantly more positive, for example, the expressions regarding the internationalization of the renminbi in the "14th Five-Year Plan" and the "Decisions" of the 20th Central Committee's Third Plenary Session were "steadily and cautiously advancing the internationalization of the renminbi," while this time the expression has changed to "promoting the internationalization of the renminbi," and it explicitly states "enhancing the level of capital account opening," which was not clearly mentioned in the previous two documents Currently, financial opening is underway, and China is facing relatively favorable conditions. First, the real effective exchange rate of the US dollar is at a historical high, while the renminbi is at a historical low, with weak expectations for renminbi depreciation, so there is no need to worry excessively about capital outflows triggered by depreciation. Second, China's real economy advantages are further being leveraged and gradually expanding into the financial sector, with the share of renminbi in international trade financing currencies rapidly rising after 2021, reaching 7.3% by the third quarter of this year. Looking ahead, the bank believes there are three main directions to strive for in promoting financial opening.

First, promote the safe and efficient outflow of domestic funds. On one hand, improve the service and regulatory system for foreign investment, encourage financial institutions to assist capable enterprises in making direct investments abroad, acquiring quality assets and resource energy projects, and participating in international cooperation such as the "Belt and Road" initiative. On the other hand, attract more foreign enterprises to issue stocks and bonds in China for financing, such as actively exploring the establishment of an international board and other mechanisms to bring high-quality overseas investment and financing demands into the domestic market.

Second, introduce advanced overseas financial expertise. In recent years, China has fully lifted foreign ownership restrictions in banking, securities, and life insurance sectors, but the market share of foreign financial institutions has increased limitedly, primarily constrained by differences in institutional environment and international rules, insufficient financial infrastructure, inadequate supply of risk management tools, and room for improvement in the rule of law. Further deepening reforms is necessary to continuously upgrade the domestic financial ecosystem.

Third, make good use of the Hong Kong market to create conditions for the above two directions. Whether it is to ensure the safe and efficient outflow of funds or to attract overseas capital, it inevitably involves issues of cross-border capital flows and currency exchange. China's control over currency exchange is an important means to prevent significant fluctuations in exchange rates and stabilize the capital market. The bank believes that at the current stage, it can consider fully utilizing the mature infrastructure of the Hong Kong market and the already established southbound flow system (including Stock Connect, Wealth Management Connect in the Guangdong-Hong Kong-Macao Greater Bay Area, etc.) to explore pioneering reforms for breakthroughs in the above two directions and accumulate experience.

5. Key Period for Carbon Peak, Four Focus Areas for Green Transition

The "14th Five-Year Plan" is a critical period for carbon peak and an important window for achieving the newly proposed 2035 Nationally Determined Contributions (NDC) targets. Based on the "Suggestions" regarding carbon peak and green production and lifestyle, the bank interprets four key changes:

First, promote the peak of coal and oil consumption. During the "13th Five-Year Plan" period, China proposed strict control over coal consumption growth and reasonable regulation of oil consumption. Currently, although coal consumption is still growing, the growth rate has slowed, and oil consumption may have gradually entered a peak plateau, with refined oil already reaching its peak in 2023. The bank believes that the next step will be to coordinate coal power development and supply-demand needs, strengthening the raw material attributes of oil as the main development direction.

Second, implement a dual control system for total carbon emissions and intensity. Different from the dual control of energy consumption during the "14th Five-Year Plan," during the "15th Five-Year Plan," China will implement a dual control system primarily focused on intensity control, supplemented by total control of carbon emissions. The reduction of carbon emission intensity will be regarded as a binding indicator for national economic and social development, and energy consumption intensity will no longer be treated as a binding indicator After reaching peak carbon emissions, implement a dual control system primarily based on total volume control and supplemented by intensity control.

Third, expand the national carbon market. The construction of the carbon market during the "14th Five-Year Plan" will be divided into two phases: the first phase, by 2027, will see the national carbon market basically covering the main emission industries in the industrial sector, implementing a quota allocation and management approach centered on intensity control, primarily through free allocation and supplemented by paid allocation; the second phase, by 2030, aims to establish the national carbon market as the main channel for greenhouse gas reduction, based on total quota control, combining free and paid allocation.

Fourth, promote green consumption. In the context of expanding domestic demand during the "14th Five-Year Plan," accelerating the implementation of fiscal and tax policies that promote green and low-carbon development, supporting the application of green technology innovation, and expanding diversified scenarios for green production and living are expected to release more space for green consumption demand.

6. Fiscal and tax reform may focus on enhancing fiscal sustainability and playing a positive role in fiscal policy

During the "14th Five-Year Plan," fiscal and tax reform may comprehensively focus on enhancing fiscal sustainability and playing a positive role in fiscal policy. In terms of enhancing sustainability, the "Suggestions" point out the need to "strengthen the overall planning of fiscal resources and budgets, improve the local tax and direct tax system, refine the tax policies for operating income, capital income, and property income, standardize tax incentive policies, and maintain a reasonable macro tax burden level." These statements are consistent with the spirit of the "Decision" passed at the 20th Central Committee's Third Plenary Session. The bank previously noted in its research report that China's current macro tax burden is not high, and future reforms on the revenue side may focus more on optimizing the tax system structure under the condition of basic stability of the macro tax burden. This is because China's tax system is more biased towards indirect taxes, which can be passed on, and the marginal propensity to consume of low- and middle-income groups is relatively high, making it regressive for middle- and high-income groups, indicating a need to reduce indirect taxes. On the other hand, direct taxes, especially on "income, profits, and capital gains," have a relatively low collection intensity. In practice, the tax rate on labor is relatively high, while the tax on capital gains is low, and China has not yet widely implemented property tax, inheritance tax, and gift tax. Therefore, reasonably adjusting and balancing the tax rates on labor income and non-labor income, promoting research to expand the direct tax base, and reducing the proportion of indirect taxes may be one of the key focuses of this round of revenue-side reform in the fiscal and tax system. Additionally, how to cultivate local tax sources and promote the rebalancing of fiscal revenue distribution between central and local governments is another main line, which is also an important response to the challenges posed by the current adjustments in the real estate industry to local financial resources. Furthermore, the "Suggestions" indicate the need to "improve the actuarial system for social insurance, continue to transfer state-owned capital to enrich the social security fund, and improve the long-term collection, overall planning, preservation, appreciation, and safety supervision mechanisms of the social security fund." If the pressure for balance between income and expenditure of the social security fund can be alleviated, it will also reduce its dependence on general budget subsidies.

In terms of playing a positive role in fiscal policy, reforms need to closely align with the intrinsic requirements of high-quality economic development. The "Suggestions" emphasize the need to "adhere to the close integration of benefiting people's livelihoods and promoting consumption, investing in goods and investing in people." On one hand, government investment may still maintain a certain intensity, with the investment structure further optimized, mainly reflected in "increasing the proportion of government investment in people's livelihoods and advancing the implementation of major national strategies and key areas of safety capability project construction with high quality"; on the other hand, in line with the policy orientation of benefiting people's livelihoods and promoting consumption, the "Suggestions" propose "reasonably increasing the proportion of public service expenditure in fiscal expenditure to enhance residents' consumption capacity." The bank believes, In the future, policy support for various stages of the entire life cycle of individuals—including childbirth, childcare, education, elderly care, and healthcare—is expected to continue to increase, aiming to reduce residents' precautionary savings and better stimulate consumer potential.

Strategy: The "Suggestions" Clarify the Medium and Long-term Construction Direction of the Capital Market

The "14th Five-Year" plan clearly defines the important position of this period in the process of achieving socialist modernization as "bridging the past and the future." The "14th Five-Year" period has initiated a new journey of comprehensive construction of a modern socialist country, while the "15th Five-Year" period is a critical time for solidifying the foundation and fully exerting efforts to basically achieve socialist modernization. The main goals of economic and social development during the "15th Five-Year" period include: significant achievements in high-quality development, a substantial increase in the level of technological self-reliance and self-improvement, new breakthroughs in further deepening reforms, a noticeable improvement in social civilization, continuous enhancement of people's quality of life, new major progress in building a beautiful China, and a more solid national security barrier. The "Suggestions," in conjunction with the long-term goal of "basically achieving socialist modernization by 2035, with per capita GDP reaching the level of moderately developed countries," propose that during the "15th Five-Year" period, "economic growth remains within a reasonable range, and total factor productivity steadily improves," "the resident consumption rate significantly increases, the role of domestic demand as the main driving force for economic growth continues to strengthen, and the economic growth potential is fully released," etc. It emphasizes goals such as "technological self-reliance and self-improvement" and "consolidation of national security barriers," reflecting that under the backdrop of "accelerating evolution of the world's century-old changes," China's development will place greater emphasis on technology and security. Regarding long-term goals, "by 2035, China's economic strength, technological strength, national defense strength, comprehensive national power, and international influence will significantly leap forward."

The "15th Five-Year" planning suggestions deploy strategic tasks and major measures for the "15th Five-Year" period by sector, clearly outlining the ideas and key work in key areas such as industrial development, technological innovation, domestic markets, economic systems, opening up to the outside world, rural revitalization, regional development, cultural construction, social welfare, green development, safe development, and national defense construction. In conjunction with the General Secretary's explanation of the "Construction," the bank believes that from the perspective of the capital market, the key points worth noting include:

The "15th Five-Year" period emphasizes leading high-quality development through technological innovation, making deployments in building a modern industrial system, accelerating high-level technological self-reliance and self-improvement, and promoting a comprehensive green transformation of economic and social development. 1) The "15th Five-Year" planning suggestions prioritize the construction of a modern industrial system, placing it at the forefront of tasks, and emphasize consolidating and strengthening the foundation of the real economy. Compared to the "14th Five-Year," the "15th Five-Year" planning suggestions further refine the requirements for traditional industry development, proposing to "optimize and upgrade traditional industries, consolidate and enhance the position and competitiveness of industries such as mining, metallurgy, chemicals, light industry, textiles, machinery, shipbuilding, and construction in the global industrial division of labor," while continuing to emphasize the strengthening of strategic emerging industries, specifically including "new energy, new materials, aerospace, and low-altitude economy," and newly proposing to proactively layout future industries, specifically including "quantum technology, biomanufacturing, hydrogen energy and nuclear fusion energy, brain-computer interfaces, embodied intelligence, and sixth-generation mobile communication" industries. 2) The "Suggestions" propose to "accelerate high-level technological self-reliance and self-improvement, and develop new types of productivity based on local conditions." For promoting technological innovation, the "15th Five-Year" period focuses more on breakthroughs and effectiveness, emphasizing "strengthening original innovation and tackling key core technologies," and clearly stating "to adopt extraordinary measures, "Promote decisive breakthroughs in key core technologies in key areas such as integrated circuits, industrial mother machines, high-end instruments, basic software, advanced materials, and biomanufacturing through the entire chain." On the other hand, greater emphasis is placed on "the deep integration of technological innovation and industrial innovation," proposing to "accelerate the efficient transformation and application of major scientific and technological achievements, and increase the construction and openness of application scenarios." At the same time, the "14th Five-Year Plan" proposes to "deeply promote the construction of Digital China, fully implement the 'Artificial Intelligence +' initiative, strengthen the integration of artificial intelligence with industrial development, cultural construction, livelihood security, and social governance, seize the commanding heights of artificial intelligence industry applications, and empower various industries comprehensively." 3) In terms of green transformation, the "14th Five-Year Plan" clearly suggests accelerating the construction of a new energy system and forming a green production and lifestyle. From the formulation of the carbon peak action plan during the "13th Five-Year Plan" to actively and steadily promoting and achieving carbon peak, the measures are more comprehensive and the goals are more rigid.

The "14th Five-Year Plan" emphasizes strengthening the domestic circulation, insisting on expanding domestic demand, benefiting people's livelihoods, and promoting consumption; at the same time, it proposes to expand international circulation and enhance high-level opening up. In the context of "current economic effective demand being insufficient" and "the international economic and trade order facing severe challenges," the emphasis on expanding domestic demand and promoting consumption in the "14th Five-Year Plan" has been further elevated. It clearly states, "Adhere to expanding domestic demand as the strategic basis, insist on benefiting people's livelihoods and promoting consumption, closely combine investment in goods and investment in people, lead new supply with new demand, and create new demand with new supply." Regarding specific measures, the "Suggestions" propose "vigorously boosting consumption. Coordinate efforts to promote employment, increase income, stabilize expectations, reasonably increase the proportion of public service expenditure in fiscal expenditure, and enhance residents' consumption capacity." The approach to boosting consumption in the "14th Five-Year Plan" is more inclined towards the demand side. In terms of "expanding effective investment," it proposes "optimizing the structure of government investment, increasing the proportion of government investment in people's livelihoods, and advancing the implementation of major national strategies and key projects for safety capabilities with high quality." At the same time, the "Suggestions" propose "resolutely breaking down the bottlenecks and obstacles hindering the construction of a unified national market, and comprehensively rectifying 'involutionary' competition." The expansion and upgrading of China's consumer market face dual constraints in the short and long term, among which the social security system still has room for improvement, and the lack of social welfare protection for some low- and middle-income groups is one of the important reasons. In response, the "14th Five-Year Plan" suggests "increasing efforts to guarantee and improve people's livelihoods," and enriches the content related to promoting high-quality population development (addressing aging, optimizing fertility and parenting, etc.), and promoting high-quality development of real estate (developing new models, optimizing the supply of affordable housing, increasing the supply of improved housing based on city-specific policies, building 'good houses,' and establishing a safety management system for the entire life cycle of housing). In terms of expanding international circulation, the "14th Five-Year Plan" suggests prioritizing "expanding high-level opening up," emphasizing actively expanding autonomous opening, promoting innovative trade development, expanding bilateral investment cooperation space, and jointly building the "Belt and Road" with high quality. During the "14th Five-Year Plan" period, facing a complex and changing international environment, China is expected to continue to use high-level opening up as a strategic grasp, steadily expand institutional opening, maintain a multilateral trade system, and share opportunities and develop together with countries around the world The "14th Five-Year" Plan proposal suggests accelerating the construction of a high-level socialist market economic system and enhancing the effectiveness of macroeconomic governance. The "14th Five-Year" Plan proposal suggests "promoting the formation of more economic development models led by domestic demand, driven by consumption, and characterized by endogenous growth," further solidifying the policy direction of expanding domestic demand and promoting consumption. The policy tone is more proactive, proposing "to implement more active macro policies to continuously stabilize growth, employment, and expectations." Especially in terms of fiscal policy, it proposes "to leverage the role of active fiscal policy and strengthen financial support for major national strategic tasks and basic livelihood." At the same time, to match the overall goal of high-quality development, the "14th Five-Year" Plan proposal suggests "strengthening the evaluation of policy implementation effects, improving the expected management mechanism, and optimizing the comprehensive performance assessment of high-quality development." In terms of the capital market, the "14th Five-Year" Plan proposal suggests "accelerating the construction of a financial powerhouse," "improving the inclusiveness and adaptability of capital market systems, and enhancing the functions of capital markets in coordinating investment and financing." The institution believes that combined with the new "Nine National Policies" released last year and the spirit of the Third Plenary Session, reforms in the capital market during the "14th Five-Year" period are expected to deepen further in terms of financing, investment, and quality, and the capacity and role of the capital market in supporting the real economy, especially the development of new productive forces, are expected to be further enhanced.

The "14th Five-Year" emphasizes coordinating development and security, advancing the modernization of the national security system and capabilities, and promoting high-quality modernization of national defense and the military. The proposal emphasizes the principle of "coordinating development and security," stating "to ensure security in development and seek development in security, strengthening bottom-line thinking." The "14th Five-Year" Plan proposal focuses on advancing the modernization of the national security system and capabilities, building a higher level of a safe China, proposing "to improve the national security system, strengthen the construction of national security capabilities in key areas, enhance public safety governance, and improve the social governance system." Regarding the high-quality advancement of national defense and military modernization, and achieving the centenary goal of building the army on schedule, it proposes to accelerate the construction of advanced combat capabilities, promote the modernization of military governance, and consolidate and enhance the integrated national strategic system and capabilities.

A scientific planning system helps implement national strategies and shapes the long-term logic of China's capital market. The "14th Five-Year" Plan proposal maintains continuity with the concepts and ideas of the "13th Five-Year" Plan while accurately grasping the development trends of China in the next five years, proposing practical and forward-looking overall ideas, major principles, main goals, and strategic tasks, which is conducive to maintaining the continuity and stability of national strategies. For the capital market, a reasonable and clear national development planning system helps achieve a closed-loop linkage of "policy expectations → capital allocation → market ecology," assisting in shaping the long-term investment logic of China's capital market.

China's capital market is expected to show a "long-term" and "steady" trend. The institution has summarized the performance of the capital market during previous five-year planning periods. From historical performance, 1) in terms of overall market performance, since the "15th" plan in 2001, each five-year plan has generally shown characteristics of more increases than decreases, rising bottoms and index centers, decreasing volatility, and increasing resilience; 2) regarding factors affecting market performance, the market performance during the five-year planning period is related to the fundamental situation, and policy intensification also helps improve confidence; 3) in terms of rhythm, the market trends during some five-year planning periods show a "strong beginning and end" characteristic, which may indicate that the warming of medium- and long-term policy reform expectations at the beginning of the five-year plan and the nearing of goals at the end of the five-year plan have a supportive effect on market performance; 4) In terms of event effects, the market's average performance has been relatively positive before and after the release of the five-year plan recommendations, which may be related to expectations regarding the five-year plan policies; 5) In terms of industry performance, industries emphasized in previous five-year plans have often shown outstanding performance, and this correlation continues to strengthen with the development of the capital market. Considering the recently released "14th Five-Year" plan recommendations and the current economic, policy, and market environment, the bank believes that during the "14th Five-Year" period, China's capital market is expected to show a "long-term" and "steady" trend. Based on the following conditions: 1) The Chinese government values the development of the capital market, which is expected to play a more important role in achieving the "14th Five-Year" and 2035 vision goals; 2) In the process of reshaping the global monetary system, the revaluation of Chinese assets may still be in the early stages; 3) The current A-shares are supported by fundamentals, and combined with China's large market environment, complete industrial chain, engineer dividend, and policy dividend, relevant fields representing China's technological innovation strength, especially new productive forces, are expected to achieve significant development; 4) Various indicators show that the overall valuation of current A-shares is still within a reasonable range and is not overvalued.

In terms of industry and allocation, combining the "14th Five-Year" plan recommendations and the development plans of some industrial policy documents in recent years, the bank believes that during the "14th Five-Year" period, key areas to focus on include digital technology, space economy, high-end manufacturing, domestic consumption, and biotechnology. Among them, in terms of modern industrial systems and high-end manufacturing, the bank believes that embodied intelligence, aerospace technology new domain equipment, solid-state batteries, hydrogen energy, and nuclear fusion energy may be important directions. In terms of digital technology, the bank believes that "Artificial Intelligence +" (AI + hardware, such as AIDC industrial chain, edge AI, etc.; software applications, such as Agent, multimodal and vertical industry implementation, etc.; industrial chain localization, such as domestic semiconductor equipment materials, basic software, etc.), 6G, and quantum technology (quantum computing, quantum communication, quantum precision measurement) may be important directions. In terms of space economy, the bank believes that low-altitude economy (aircraft manufacturing, air traffic management infrastructure, drone logistics, eVTOL manned, etc.), aerospace (satellite internet, etc.), and deep-sea technology (underwater special equipment, deep-sea resource development, underwater data center industrial chain, etc.) may be important directions. In terms of biotechnology, the bank believes that innovative drugs, high-end medical devices, and smart healthcare may be important directions. In terms of domestic consumption, the bank believes that new consumption (IP trendy toys, gold and jewelry, outdoor sports, milk tea and coffee, pets, beauty products, etc.), quality upgrading of commodity consumption (smart technology consumption), and expansion of service consumption (cultural tourism, sports, and leisure) may be important directions