China’s 2026 Policy and the Implications for Stock Investment Strategies in Indonesia

Entering the next Five-Year Plan period (2026–2030), China is shifting its development strategy toward a more quality-driven growth model. The focus is on strengthening a modern and more productive industrial system, promoting higher value-added, smarter, and greener manufacturing, and positioning science and technology as the main engine of economic growth. This transformation is also expected to expand opportunities for international cooperation, particularly in emerging industrial chains such as solar power, batteries, and electric vehicles.

In 2026, as the first year of the new plan, China’s economic policy is expected to remain focused on stabilizing growth to ease deflationary pressures. A growth target of around 5% is projected as the main benchmark, supported by fiscal stimulus, potential monetary easing, and consumption-boosting policies such as trade-in incentives and early-year government financing. However, the transition toward a consumption-driven economy is likely to be gradual due to ongoing structural challenges, including weak household demand, property sector adjustments, and excess capacity in several industries.

Image Source: Supriyanto/Kompas.id

China’s Economic Outlook for 2026–2030

For Indonesia, the fastest impact is typically felt through trade and commodities, given the strong export linkages with China. WITS/World Bank data show that China is Indonesia’s largest trading partner, with a partner share of around 25.09%. In terms of composition, Indonesia’s exports to China are largely supported by iron and steel, mineral fuels, and nickel products. This means changes in China’s industrial cycle and investment activity can quickly be reflected in industrial input demand and commodity price movements.

In Indonesia’s stock market, the most directly related sectors are basic materials and parts of the energy sector that are sensitive to Asian demand. In addition, rising production and trade activity usually supports the Industrials sector as well as logistics and transportation, in line with higher shipping volumes and port activity.

Another key area during 2026–2030 is the energy transition and power grid expansion. China is pushing investment in electricity networks to better absorb new energy sources, with a target of around 30% of electricity coming from renewable energy by 2030. This policy could increase demand for electrical materials such as cables and conductors, while also creating opportunities for Indonesian listed companies in clean energy and utilities. However, the actual impact will depend heavily on project execution and global commodity prices.

Despite the significant opportunities, volatility risks remain. Price pressures and demand imbalances may lead to prolonged stimulus measures, while accelerated investment could increase the risk of overcapacity. Therefore, the most realistic approach is to use China’s Five-Year Plan as a sector roadmap, by monitoring industrial indicators, stimulus direction, and energy policies, then selecting Indonesia Stock Exchange (IDX) listed companies related to materials and minerals, logistics and industrials, as well as electrification and clean energy.

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Disclaimer: The content is made for educational purposes, not a recommendation to buy or sell a particular stock. PT KAF Sekuritas Indonesia is licensed and supervised by the Financial Services Authority (OJK).