China's annual **Two Sessions (Liang Hui)** — the meetings of the National People's Congress (NPC) and the CPPCC — wrapped up this week, delivering a policy blueprint that sent a cautiously optimistic signal to global investors. Here's what was revealed and what it means for the broader Asian investment landscape.
### Growth Target: "Around 5%" Again
Premier Li Qiang reiterated a **GDP growth target of approximately 5%** for 2026, consistent with last year's goal. While this may seem ambitious given the persistent property sector overhang and deflationary pressures, the message is clear: Beijing will do what it takes to hit the number.
Key support levers announced:
- An **expanded fiscal deficit** of 4% of GDP (highest in decades) to fund infrastructure, green energy, and AI
- Expanded **state support for consumer goods trade-in subsidies** — a direct boost to domestic appliance, EV, and electronics sectors
- A **RMB 1 trillion special bond issuance** for strategic technology investments, including domestic semiconductors and AI infrastructure
### Stocks to Watch
The "New Productive Forces" theme remains front and centre. Companies tied to **humanoid robotics, AI infrastructure, and domestic chip design** saw strong performance this week on the A-share markets.
Hong Kong's Hang Seng Tech Index rose nearly 3% mid-week on the back of these announcements, suggesting offshore investors are cautiously returning to China tech names.
### The Malaysia Connection
Malaysian companies with China exposure — particularly in **palm oil, rubber gloves, and construction materials** — should benefit from improved Chinese domestic demand. Watch for guidance updates from IOI Group, Kossan Rubber, and Gamuda as the next reporting season approaches.
The Bursa KLCI has been relatively resilient versus regional peers YTD, partly due to its defensive commodity weighting and lower direct exposure to U.S. tariff narratives.
### Our View
The 2026 Two Sessions delivered enough concrete stimulus to justify cautious optimism on China-linked names. The key risk remains execution — Beijing's ability to translate policy intent into tangible demand recovery. We remain selectively constructive.
*Sources: Xinhua, SCMP, Bloomberg Economics, March 2026*
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