The Meeting
China’s Fourth Plenary Session of the 20th Communist Party Central Committee convenes October 20-23, 2025 in Beijing. President Xi Jinping and over 370 senior Party members will finalize proposals for China’s 15th Five-Year Plan (2026-2030). The formal adoption will occur in early 2026 at the “Two Sessions” parliamentary meetings.
Current Economic Pressures
Capital Allocation Issues:
- China’s economy currently operates at approximately 41% capital expenditures
- Significant under-utilized capacity across multiple sectors
- EV industry example: strong products but zero or negative margins due to lack of pricing power
External Factors:
- U.S. tariffs ranging from 10-50% across multiple sectors
- System-wide economic pressure versus targeted firm-specific challenges
- Belt and Road Initiative: reported losses exceeding $1.5 trillion
Internal Dynamics:
- Reported tension between command economy approach and pro-growth factions
- Elite institutional concerns over capital misallocation
- Potential leadership pressure surrounding the current plenum
U.S. Market Implications
Current conditions:
- U.S. corporate profits showing increases
- Potential for market acceleration if China undergoes policy shifts
- Capital flow and supply chain implications for U.S.-based portfolios
Market Outlook
Significant leadership or policy changes in China could create new dynamics for global markets. A shift toward more market-oriented reforms could impact U.S. equities, international capital flows, and corporate profitability.
Watch our video analysis for a deeper dive into what these developments could mean for your portfolio and how we’re monitoring this situation for our clients.
