CGS's Zhang Jun: Technology Must Be Rooted in Industry to Avoid Becoming a Capital Bubble

At the 2025 Southern Finance Forum's securities industry sub-forum, Zhang Jun, Chief Economist of China Galaxy Securities (CGS), Dean of the Research Institute, and Deputy CEO of China Galaxy International, emphasized that the "15th Five-Year Plan" proposal repositions the relationship between technological innovation and the industrial system—technology must be rooted in industry to avoid becoming a capital bubble.

Held from December 5 to 6 in Guangzhou, the forum, themed "The Power of Consensus—Innovation Surge, Revaluation of Chinese Assets," was hosted by the Southern Finance Omnimedia Group and attended by representatives from finance, academia, and business sectors.

During the sub-forum, Zhang Jun moderated a roundtable discussion featuring leading economists from major domestic brokerages, focusing on economic trends and capital market prospects for the opening year of the "15th Five-Year Plan."

**Domestic Demand-Driven Growth and Rebalancing: A New Outlook for 2026** Zhang Jun highlighted that 2026, as the first year of the "15th Five-Year Plan," is critical for economic direction. Discussions centered on whether a preliminary consensus could be reached regarding global and Chinese economic trends in 2026. Three key conclusions emerged:

1. **Domestic Demand as the Primary Engine**: Experts agreed that consumption and investment will drive China's growth in 2026, with service consumption becoming a new growth area under policies to boost consumption rates. 2. **Dual-Driven Technological Innovation**: Technological advancements are pivotal for both real economic growth and capital market narratives, with China's tech sectors like automotive and AI gaining global competitiveness. 3. **Global Rebalancing and Mild Inflation**: The global economy is adjusting, with China entering a cycle of mild inflation and structural reforms, supported by a rebound in PPI.

**A-Share Revaluation: From Valuation Expansion to Earnings Recovery** Zhang Jun noted the market's stabilization post-"9·24" policy measures, with focus on whether revaluation logic will persist and if PPI-driven earnings recovery could trigger a "Davis Double Play." Experts concluded: - Revaluation logic remains intact, with capital markets now seen as central to high-quality development. - Reflation is key: A sustained PPI rebound would bolster corporate earnings and market confidence.

**U.S. AI Bubble: Structural Risks vs. A-Share Resilience** While experts acknowledged structural bubbles in U.S. AI stocks, opinions diverged on their unwinding. Zhang Jun stressed China's advantage in AI applications, where technology integrates with real industries rather than fueling speculative narratives.

**Risk Warnings: Navigating Uncertainty** Experts flagged potential systemic risks: - Yen carry-trade reversals. - Industrial system transition pressures. - Liquidity risks from debt bubbles. - Geopolitical inflation shocks. - AI-driven employment displacement.

Zhang Jun concluded that Chinese assets' revaluation is fundamentally sound, insulated from external volatility.