At the 2025 Analyst Conference and the 7th Sina Finance "Golden Kirin" Best Analyst Awards Ceremony held on November 28, Li Chao, Chief Economist and Co-Director of the Research Institute at Zheshang Securities Co.,Ltd., led his team to secure the top position in macroeconomics.
Li Chao set an optimistic tone for China's economy and capital markets in 2026 with a bold statement: "Hoist the sail to cross the vast sea." Using his pioneering four-tier analytical framework, he systematically interpreted macroeconomic fundamentals, growth drivers, and market opportunities, outlining a development blueprint for the first year of China's 15th Five-Year Plan.
**Four-Tier Framework Decoding Economic Fundamentals: High-Quality Development as the Core Anchor** Addressing market divergences over the 2026 economic outlook, Li emphasized that understanding China's economy requires grasping its fundamental operational logic. His four-tier framework—prioritizing U.S.-China relations, social stability, structural transformation, and economic growth—breaks the limitations of traditional growth-centric analysis.
Under this framework, 2026, as the inaugural year of the 15th Five-Year Plan, will be defined by structural transformation driven by high-quality development. Li noted that this transformation is progressing steadily while maintaining growth resilience. Exports, a key growth pillar despite trade friction, continue to stabilize due to competitive pricing advantages, providing a buffer for structural reforms.
Market confidence in structural transformation is steadily rising. Li acknowledged that reforms come with costs, but the confidence rebound since 2025 will persist into 2026, serving as psychological support for economic stability. Data from the first three quarters of 2025—5.2% GDP growth, rising shares of equipment and high-tech manufacturing, and double-digit export growth in "new trio" sectors—validate this transformation, aligning with Li's analysis.
**Liquidity Driving Market Upside** Li identified interest rate declines as the core market driver. Improved confidence since 2025 has cleared the path for liquidity to flow into capital markets. In 2026, the valuation boost from lower rates will fully materialize.
This logic aligns with global precedents. During the U.S.'s 35-year rate decline (1984–2020), stocks and bonds thrived even amid fragile recoveries. Japan's QE-driven rate cuts (2013–2019) similarly spurred a dual-asset rally. China's current rate environment and confidence recovery are replicating these conditions.
**Clear Investment Directions: Tech vs. Dividend Stocks** Li highlighted two rate-sensitive investment themes: tech and dividend stocks. While both benefit from lower rates, their risk-appetite dynamics differ sharply, with U.S.-China relations being the key variable.
Tech stocks hinge on long-term valuation repricing. Lower rates reduce discount rates for future cash flows, amplifying the value of tech firms' growth potential beyond near-term profits. This aligns with 2025's 9.6% growth in high-tech manufacturing and surging output of industrial robots, underscoring the sector's promise.
Dividend stocks appeal for their relative yield advantage. As bond coupons shrink, high-dividend stocks offer stable payouts that now surpass bond yields, making them a "steady choice" for asset allocation. A-share dividend sectors still have room for valuation recovery, ideal for low-risk appetites.
Li's allocation strategy is clear: favor dividend stocks when U.S.-China tensions escalate (low risk appetite) and pivot to tech stocks during détente (high risk appetite). This approach leverages rate declines while adapting to marginal shifts in core variables, offering investors a actionable framework.
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