20 years ago, China made headlines due to its high level of smog and air pollution. 10 years ago, China was considered the world’s mass producer of low quality, low cost items.
Today, China is known for its electric vehicles, tech innovation and AI advancements.
The country’s evolution through the years is the result of strategic planning and execution. And it’s followed the same structure for 75 years - creating five-year plans that outline its key priorities for development, economic goals, and action plan.
Last month, China released its latest five-year plan for 2026-2030. As the world’s second largest economy and the largest exporter globally, its policies are not something investors should be ignorant about.
What happened in the markets this week?
🌍 Strait of Hormuz tensions disrupt global oil shipping despite ceasefire ( ABC News )
• What happened: The U.S. blockaded Iranian ports while Iran seized and fired on ships in the Strait of Hormuz, even as both sides maintained a ceasefire. Shipping traffic through the strait has dropped sharply, with some vessels still getting through while others are turned back or intercepted.
• How it impacts investors: Disruption in a key oil route, which normally handles about 20% of global supply, has already raised risks for energy prices and market volatility. Investors may see further effects across commodities, transport, and inflation-sensitive sectors.
• Next steps: Read our previous edition of Market Insights where we outline how to invest during the crisis in the gulf .
🍏 Apple lines up its next CEO as Tim Cook moves to chairman role ( Apple )
• What happened : Apple said Tim Cook will become executive chairman, while John Ternus will step in as CEO on September 1, 2026. Cook will stay on as CEO until then to help manage the transition.
• How it impacts investors : Big leadership changes can shift strategy, even when they’re planned. Watch closely for any changes in product direction or growth priorities. There are now some key areas analysts expect will be the first things Ternus needs to look into.
• Next steps : Check Apple’s fundamentals and see how the leadership shift could shape its future.
💊 Amazon jumps into weight loss drugs with new GLP-1 program ( CNBC )
• What happened : Amazon launched a GLP-1 weight loss program through Amazon One Medical, combining doctor visits, prescriptions, and delivery. Prices start as low as $25 per month with insurance.
• How it impacts investors : Amazon’s move could shake up the booming weight loss market. It adds pressure on digital health platforms and biotech firms already competing in this space. Shares of companies tied to weight loss drugs like Amgen and Him & Hers Health fell after the news.
• Next steps : Use the screener to find companies exposed to this segment. An example is our prebuilt Biotech screener .
🤖 Adobe leans into AI and announces $25B share buyback ( Reuters )
• What happened: Adobe launched a new AI suite called CX Enterprise to help companies automate and personalize their marketing. It’s also teaming up with Amazon, Microsoft, OpenAI, and Nvidia to make sure the tools work across platforms. With its share price at a low, the company also announced a share buyback.
• How it impacts investors: AI competition is heating up fast, and it’s putting pressure on traditional software companies. Investors may see more volatility as markets reassess who wins and who falls behind.
• Next steps: Review Adobe’s business model and fundamentals to assess its fair value and future potential.
💻 Intel jumps 15% on strong AI-driven outlook ( Reuters )
• What happened : Intel forecast Q2 revenue above expectations, driven by demand for AI-focused server chips. The company also beat Q1 estimates and highlighted partnerships and restructuring efforts as part of its turnaround plan.
• How it impacts investors : Intel’s rebound shows it’s starting to benefit from the AI boom after falling behind earlier. But with strong competition from Nvidia, AMD, and Arm, execution will be key.
• Next steps : Compare Intel with its peers to see who’s best positioned in AI.
Why should I know about China’s five-year plan?
China exported $3.7 trillion worth of goods last year, far above the US’s $2.2 trillion. It’s the second most populated country after India, with 1.4 billion people - triple the number of people in the U.S. It’s a country that has risen from poverty over the last two decades to now become an economic and technological powerhouse.
This year, China published its 15th five-year plan. This national plan forms the foundation of the strategy of each ministry, province, and municipality in China, all of which set their own five-year plans for their area. Government officials are handed KPIs based on the plan, with promotions and pay rises based on whether they hit their targets. Investments and subsidies are provided based on the key industries and areas of focus outlined in the plan.
And it works.
The 11th to 13th five-year plans focused on environmental protection and developing renewable energy sources as China combated pollution. Today, that’s no longer as big a problem.
Category of KPIs outlined in each plan - Merics
“Made in China 2025” strategy
From the 13th five-year plan (2016+) onwards, China focused more heavily on innovation to prevent its reliance on old heavy industries.
It also started its “ Made in China 2025 ” strategy which had the goal of upgrading the “bad quality, low cost” consumer goods China was known for to higher quality tech-focused items like semiconductors and robotics.
With those goals in mind, the policies created back then included:
- Subsidies for semiconductor development : this funded Xiaomi’s (SEHK:1810) development of its first smartphone processor.
- Low-interest loans and funding for advanced manufacturing and tech: China’s National Integrated Circuit Investment Fund received over $20 billion. This supported companies like SMIC (SEHK:981) , which now supplies global companies like Qualcomm and Broadcom ,
- Permits quickly granted for key industries : Baidu (Nasdaq:BAIDU) easily received permission to test self-driving vehicles.
- Easy access plus subsidies to materials needed for development: Chinese government funded the materials needed for manufacturing EV batteries.
As a result, many Chinese companies are now global leaders in their field:
- Baidu (AI, autonomous vehicles)
- Alibaba (e-commerce)
- Tencent (e-commerce)
- DJI (AI, drones)
- BYD (electric vehicles)
- SMIC (semiconductors)
- Huawei (semiconductors, telecommunications and consumer electronics)
- Xiaomi (consumer electronics)
- Sinopharm (medicine)
And you’d probably be familiar with many of these names.
Before China implemented its strategy, the majority of these companies either didn’t exist or were unknown. This highlights the importance of understanding what’s next in China’s five-year plans.
With that said, let’s finally get into it.
China’s five-year plan for 2026 to 2030
Today’s China can be summarized into a few key points:
- widespread renewables infrastructure
- advanced tech and healthcare innovations
- high output manufacturing
- weakened real estate industries
- an aging population
- facing high geopolitical threat
- low domestic spending
China’s 15th five-year plan outlines how it plans to tackle each problem, plus lists it out in order of priority.
Biggest focus is on modernization
In the 14th five-year plan, innovation was near the top of the priority list. Back then, the priority was tech breakthroughs. This time, the focus is on modernization and industrial upgrading.
What this means in a nutshell is that China is now shifting from R&D to implementation .
As mentioned, the previous decades were spent on infrastructure upgrades and the development of Chinese-built tech to shift the country away from older industries to more tech-driven ones.
China is now a leading producer of the world’s advanced innovations: semiconductor chips, generative AI (i.e. DeepSeek), self-driving cars, humanoid robots, 5G, quantum computing, and many, many more.
💡What this means for investors : If we were to look at how China implemented previous strategies, this priority will likely mean further government investment in developing the infrastructure needed to roll out its innovations at scale.
Example policies would be setting up 5G infrastructure across China, funding to mass produce robots, and subsidies for the commercial use of self-driving cars. This will heavily benefit Chinese companies in these industries.
Next priority: self-reliance and digitalization through widespread AI application
Tariffs from the U.S., export bans, and wars had been external threats to China’s technological growth. For example, Nvidia had been banned from exporting its most advanced chips to China. These have made it obvious that global supply chains can’t always be relied on.
Moving forward, China is taking a more defensive stance. It will now double down on building its own capabilities across the entire tech stack.
The plan outlines how it believes this will be implemented - with AI set to be at the forefront of China’s evolution across multiple industries. The Chinese government expects that implementing AI into its processes will improve the broader landscape much faster.
As such, Chinese companies like DeepSeek have largely taken an open access approach with their tech.
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💡 What this means for investors: China may support multiple areas of technology, but its key focus being AI means it’s likely that AI companies in China will enjoy more benefits than others. Meanwhile, China’s shift toward self-reliance also means from foreign firms operating in these areas may find it harder to compete as China prioritises domestic champions.
“New quality productive forces”
A new term emerged in the 15th five-year plan that wasn’t present in the previous plans, and that was “new quality productive forces.”
What this means is for China to lead the world’s development of “emerging industries” and “future industries.”
These are your integrated circuits, embodied AI, bio-manufacturing, 6G, green hydrogen, brain-computer interfaces and highly advanced medical equipment, amongst several other highly disruptive technologies .
This likely means further increase in China’s R&D investment specifically in new technologies.
On that of that, China has set a KPI here of increasing the number of new high-value innovation patents from 16 per 10,000 people in 2025 to over 22 per 10,000 by 2030 .
💡 What this means for investors: Keep updated on policies and companies that are within these emerging industries. These companies have a strong tailwind and government support, and could become the next Xiaomi, Huawei, BYD or SMIC.
Strategic opening up to foreign investment
While China hopes to become self-reliant in technological areas, the country’s government is aware of the limitations of discouraging foreign trade.
With that, China is strategically opening up some industries to foreign investment.
These industries have been chosen based on their ability to bring in more benefit than risk, with the Chinese government still overseeing the level of investment and the demographics of these investors.
Here are a key few industries opening up :
- Telecom services : foreign ownership restrictions are being lifted for services like internet service providers and information protection services.
- Healthcare : China will be expanding the area where wholly-foreign owned hospitals can operate in.
- Biotech
- Education
Last year, the use of foreign capital in China declined by 9.5% YoY. China plans to reverse that in the following years. With these plans, the government has since reduced the negative list - which lists out the restrictions for investment.
💡What this means for investors : Opening up these sectors would mean that large foreign corporations in these industries can expand into a country with a massive population (i.e. more customers) and a large distribution network. It is likely that only a few companies will be accepted in each sector, which makes those that do, ones to watch.
On the other hand, this increases competition for domestic players in the field - however, given that China has chosen to open these up means it’s probable that there aren’t enough domestic suppliers within these industries.
💡 The Insight: Policy will likely create the next winners
China’s five-year plans have consistently shown one thing: when the government backs an industry, it has a strong chance of producing the next generation of market leaders.
The 15th five-year plan outlines China’s next focus areas.
China is now focusing on moving up the value chain, shifting away from low-cost manufacturing toward high-tech, higher-value industries.
That means keeping a close watch on the industries at the centre of this shift - areas like AI, semiconductors, advanced manufacturing, and the emerging technologies outlined in the previous section. These are the sectors most likely to receive funding and favourable regulation.
At the same time, this also means the opportunity set is becoming more concentrated. Rather than broad-based growth across the entire market, performance is likely to be driven by a smaller group of industries aligned with these priorities.
Key events next week
Tuesday
- 🇯🇵 BoJ Interest Rate Decision
- Forecast : 0.75%, Previous : 0.75%
- Why it matters : Even small changes in tone could impact the yen and signal whether Japan is finally normalising rates.
Wednesday
- 🇩🇪 Inflation Rate (YoY)
- Forecast : 3.3%, Previous : 2.7%
- Why it matters : A rebound in inflation would reinforce concerns that price pressures in Europe remain sticky, complicating the ECB’s path to rate cuts.
- 🇨🇦 BoC Interest Rate Decision
- Forecast : 2.25%, Previous : 2.25%
- Why it matters : Investors are looking for guidance on the timing of rate cuts. Sticky inflation or strong growth could keep policy tighter for longer.
Thursday
- 🇺🇸 Fed Interest Rate Decision
- Forecast : 3.75%, Previous : 3.75%
- Why it matters : The focus is on forward guidance. Any signal that rate cuts are delayed could pressure equities and support the US dollar.
- 🇪🇺 ECB Interest Rate Decision
- Forecast : 2.15%, Previous : 2.15%
- Why it matters : With inflation still above target, markets are watching whether the ECB leans cautious or opens the door to easing later this year.
- 🇬🇧 BoE Interest Rate Decision
- Forecast : 3.75%, Previous : 3.75%
- Why it matters : Growth is fragile and inflation remains elevated. Any shift in tone could quickly move expectations for UK rate cuts and impact the pound.
- 🇪🇺 Inflation Rate (YoY)
- Forecast : 2.9%, Previous : 2.6%
- Why it matters : A higher print would suggest inflation is proving harder to tame, reducing the likelihood of near-term rate cuts from the ECB.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
Simply Wall St analyst Stella and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
Stella Ong
Stella Ong is an Equity Analyst with over 10 years of experience investing in international markets. She has worked across multiple brokers, delivering equity research, market analysis, and financial commentary, and currently hosts Simply Wall St’s Market Insights and Weekly Picks podcasts.
