(Bloomberg) — Chinese stock investors face a pivotal week as top officials meet to discuss economic priorities, with hopes running high for further stimulus to sustain this year’s blistering rally.
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Markets will be focused on how Beijing can offset the risk of US tariffs after President Donald Trump threatened another 10% levy. A ramp-up in fiscal spending is expected to be announced at the National People’s Congress to bolster domestic demand, as well as measures to defuse a property crisis and put an end to the deflationary spiral.
Efforts to spur technological advancements — ones that could see the likes of AI start up DeepSeek spring up — will also be crucial. Optimism over artificial intelligence has led Chinese tech stocks in Hong Kong to a three-year high, raising the risk of a sudden selloff if Beijing’s push for innovation disappoints.
“Higher government spending driven by fiscal deficit expansion and rebounding credit impulse would help alleviate deflationary concerns and add to the ongoing China equity market re-rating,” said George Efstathopoulos, a portfolio manager at Fidelity International. China holds the keys to “rebalance its economy and create more sustainable growth domestically.”
Here are some of the areas closely watched by equity traders and analysts ahead of the meeting that kicks off on Wednesday:
AI Race
The extent of China’s support for AI and other cutting-edge technology will be of major interest after DeepSeek triggered a valuation re-rating of the sector. Investors are expecting measures to “push forward the AI-related investment and adoption,” according to Goldman Sachs Group Inc. economists.
President Xi Jinping’s embrace of major business chiefs — who had once laid low during a regulatory crackdown — suggests the nation will double down on its drive to achieve tech supremacy. Beyond AI, robotics, low-altitude and digital economy sectors may be of focus.
Potential equity market winners include chipmakers such as Hua Hong Semiconductor Ltd., whose shares have risen about 58% in Hong Kong this year. Robotics firms UBTech Robotics Corp. and Shenzhen Inovance Technology Co. have gained more than 60% and 20% each during the period.
A further pledge in support for the private sector will benefit China’s top two internet giants Alibaba Group Holding Ltd. and Tencent Holdings Ltd., which have roared back after years of sluggish market performance.
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