China's Post-Fourth Plenum Equity Opportunities: Tech Self-Reliance and Anti-Involution as Catalysts for Growth

China's 2024 Fourth Plenum marked a pivotal recalibration of its economic strategy, emphasizing technological self-reliance and anti-involution as twin pillars for the 15th Five-Year Plan (2026–2030). The plenum's focus on "new quality productive forces" and industrial modernization reflects a strategic shift toward high-quality development, driven by innovation and sustainable growth according to China Briefing. This policy framework, while ambitious, creates clear structural opportunities for investors in sectors poised to benefit from state-backed initiatives and market restructuring.

Tech Self-Reliance: A Strategic Imperative

The plenum reaffirmed China's commitment to reducing foreign dependencies in critical technologies, particularly semiconductors and artificial intelligence. U.S. export controls have accelerated domestic innovation, with firms like Huawei's Ascend and Cambricon Technologies gaining traction according to Caixin Global. The government's "Big Fund" for semiconductors and a 400 billion yuan AI subsidy package underscore this priority as research shows.

Semiconductors: Domestic chipmakers such as Hua Hong Semiconductor and Semiconductor Manufacturing International Corp. (SMIC) are beneficiaries of this push. Hua Hong, for instance, surged over 120% year-to-date in 2025, reflecting investor confidence in its capacity to meet rising demand for indigenous chips. The plenum's emphasis on RISC-V server chips and AI accelerators further positions these firms as long-term winners.

AI: China's AI ecosystem is maturing rapidly, with companies like Biren Technology (BR100/BR104 GPUs) and Horizon Robotics leading in AI-specific hardware. The government's focus on optimizing software for mid-tier hardware-critical for sectors like banking and healthcare-creates a unique competitive edge.

Anti-Involution: Restoring Profitability in Key Sectors

The anti-involution campaign targets overcapacity and destructive price wars in industries such as electric vehicles (EVs), solar energy, and steel. By enforcing output quotas, energy efficiency standards, and market-based pricing mechanisms, the government aims to stabilize supply-demand dynamics and restore corporate profitability according to Trowe Price.

EVs and Solar: Companies like BYD and Contemporary Amperex Technology (CATL) are expected to benefit from reduced price competition. BYD, for example, has seen profit margins stabilize as the anti-involution policy curbs aggressive pricing. Similarly, CATL's dominance in battery technology positions it to capitalize on a more orderly market environment.

Solar: Overcapacity in solar manufacturing-where China's 1 terawatt annual capacity far exceeds global demand-has led to a 50% decline in module prices. The government's Document 136, requiring grid connection agreements for new projects, and energy consumption thresholds for polysilicon producers, are early signs of structural correction. Firms like JinkoSolar and LONGi Green Energy may see improved margins as the sector rebalances according to The Ethicalist.

High-Conviction Stocks and Sectors

1. Semiconductors: Hua Hong Semiconductor (Hua Hong) and SMIC remain top picks, supported by government subsidies and a growing domestic demand for advanced chips as reports indicate.
2. EVs: BYD and Nio are well-positioned to benefit from anti-involution measures, with BYD's vertical integration and Nio's focus on premium segments offering resilience according to Asia Society.
3. Solar: JinkoSolar and LONGi Green Energy could see margin expansion as the sector transitions from price-driven to quality-driven growth according to Mercom India.
4. AI: Biren Technology and Horizon Robotics are key players in China's AI chip race, with strong government backing and growing international citations for their research as noted in analysis.

Risks and Considerations

While the policy tailwinds are clear, challenges remain. The anti-involution campaign's reliance on private sector cooperation introduces uncertainty, particularly in sectors dominated by non-state enterprises as Trowe Price reports. Additionally, global trade tensions-such as U.S. and EU protectionist measures against Chinese solar and EV exports-could temper growth prospects according to Yahoo Finance. Investors must also weigh valuation headwinds in tech stocks, which have surged on policy optimism but require sustained earnings growth to justify their multiples as Saxo Bank observes.

Conclusion

China's post-Fourth Plenum strategy represents a bold reorientation toward technological sovereignty and industrial discipline. For investors, the most compelling opportunities lie in sectors directly aligned with these priorities: semiconductors, AI, EVs, and solar. While risks such as implementation delays and global competition persist, the structural underpinnings of these policies-backed by substantial fiscal and regulatory support-suggest a long-term bull case for high-conviction stocks in these areas. As the 15th Five-Year Plan unfolds, the ability to navigate both policy and market dynamics will be key to capturing value in this evolving landscape.