Beijing’s Upcoming Economic Policy Conference Becomes Key Test for China’s Stock Rebound

Investors have been attempting to gauge whether China’s recent stock-market rebound - triggered in part by regulatory reforms, stepped-up market interventions, and expectations of stronger 2026 recovery plans, can continue without more decisive policy momentum. The CEWC, normally held in December, sets China’s economic priorities for the coming year and often signals the direction of monetary and fiscal policies. This year’s meeting is especially important because the economy has entered a phase of slower structural growth, with deflationary pressures, housing distress, and weak domestic demand weighing heavily on sentiment. Many analysts argue that without a more forceful fiscal stance, the recent rebound in the CSI300 and Shanghai Composite may prove temporary.

In the weeks leading up to the meeting, China’s equity market has shown signs of recovery, supported by the securities regulator’s pledge to expand access for tech companies to raise capital, the reintroduction of flexible listing standards on the STAR Market, and increased scrutiny of short-selling. State-backed funds have also been quietly intervening to stabilise the market, purchasing ETFs and blue-chip shares to prevent sharp declines. But institutional investors remain cautious, noting that these measures, while helpful, do not address deeper issues such as local-government debt risks, insufficient household consumption, and persistent weakness in the property sector. Without structural reforms or increased fiscal transfers to households, they warn that equities may lack sustained upward momentum.

Global funds are also monitoring China’s currency and monetary policy stance. Economists expect the People’s Bank of China (PBOC) to maintain a supportive interest-rate environment but avoid aggressive easing that could trigger capital outflows or put excessive pressure on the renminbi. The PBOC has already guided lending rates downward, increased liquidity injections, and relaxed certain credit constraints, yet households and private firms remain reluctant to borrow due to pessimistic expectations. For investors, this signals that monetary tools may be reaching their limits unless paired with stronger fiscal policies, such as direct consumption incentives or expanded public investment into high-productivity sectors.

Ultimately, the durability of China’s stock rebound hinges on whether policymakers deliver tangible measures rather than symbolic signals. Investors are looking for a clearer roadmap to stabilise the property sector, accelerate industrial upgrades, and boost consumer spending, areas that have dragged down growth in 2024–2025. The CEWC is expected to reaffirm the development of “new quality productive forces,” including AI, electric vehicles, semiconductors, and advanced manufacturing, but markets will judge the outcome based on the specificity and scale of actual support. The conference results will likely determine whether the rebound evolves into a sustained recovery or fades into another short-lived rally driven by policy speculation.