China\u2019s Politburo met on Friday and described the \u201c14th five-year plan\u201d period as \u201cextremely unusual and extraordinary\u201d. It said China\u2019s economic, scientific and technological, and overall national strength have reached a new level.<\/p>\n
The meeting called for more active macro policies and better forward-looking, targeted policy coordination. It reiterated the approach of seeking progress while maintaining stability, and said policy should be coordinated across domestic and external conditions.<\/p>\n
It set out actions to deepen the unified national market and to prevent and resolve risks in key areas. It also called for expanding domestic demand, optimising supply, and developing new quality productive forces based on local conditions.<\/p>\n
The Politburo said reform measures should be better coordinated with macro policy. It also pledged to speed up high-level scientific and technological self-reliance and self-improvement, and to increase efforts to protect and improve people\u2019s livelihoods.<\/p>\n
In market moves, AUD\/USD was near 0.7128 at the time of writing, up 0.24% on the day.<\/p>\n
The statements reaffirm a commitment to macro-policy support, which should dampen volatility in Chinese equity markets. Given that the Caixin Manufacturing PMI for January 2026 recently beat expectations by printing at 51.2, we see a basis for selling out-of-the-money puts on broad indices like the FTSE A50 or the Hang Seng. This strategy benefits from both a stable to rising market and a decrease in implied volatility.<\/p>\n
This pro-growth and domestic demand focus is bullish for industrial commodities and, by extension, commodity currencies. The Australian dollar\u2019s reaction is a key tell, as iron ore prices on the Dalian exchange have already climbed 8% this past month to over $135 a tonne. We should consider buying AUD\/USD call options to capitalize on further strength as stimulus measures filter through the Chinese economy.<\/p>\n
The emphasis on “new quality productive forces” and technological self-reliance points towards continued support for specific sectors. After a difficult 2025, the Hang Seng Tech Index has already shown signs of life, rising 12% year-to-date. We see an opportunity in call spreads on technology-focused ETFs to play this theme of targeted government backing.<\/p>\n
We should, however, remain mindful of the pledge to resolve risks, especially after the property sector’s persistent weakness throughout 2025. This suggests that while the overall market may be supported, specific over-leveraged companies could still face headwinds. A pair trade, going long a broad market index future while buying puts on a vulnerable real estate developer, could be a prudent hedge.<\/p>\n
Looking back at the policy responses of late 2025, the government showed a preference for gradual, targeted support rather than overwhelming stimulus. This suggests that strategies expecting a slow and steady appreciation are more likely to succeed than those betting on a sudden, explosive rally. Therefore, selling put spreads offers a more favorable risk-reward profile than buying outright calls for the coming weeks.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Politburo calls 14th plan \u201cextraordinary\u201d, urges proactive macro policy, unified national market reforms, demand expansion, tech self-reliance.<\/p>\n","protected":false},"author":103,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-50373","post","type-post","status-publish","format-standard","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\n\t\t