The 2026 Government Work Report, while outlining tasks for annual economic and social development, has set a distinct tone for the beginning of the 15th Five-Year Plan period. Emphasizing "progress amid stability and enhanced quality and efficiency," the report advocates for continued proactive fiscal policy and appropriately accommodative monetary policy, focusing on stabilizing employment, businesses, markets, and expectations. For the capital markets, this represents both a clear policy signal and a significant development opportunity. A stable macroeconomic environment provides a solid foundation for the steady and long-term development of capital markets, while a series of more specific and targeted reform arrangements further highlight the crucial role of capital markets in serving high-quality development and chart a clear direction for their stable growth.

Policy expectations for the better development of capital markets remain stable. In reviewing the previous year's work, the report noted that "comprehensive measures stabilized the stock market, leading to its recovery, rebound, and active trading." For this year's reform tasks, it explicitly calls to "continuously deepen comprehensive reforms in capital market investment and financing, further improve the mechanism for medium- and long-term fund inflows, enhance investor protection systems, expand exit channels for private equity and venture capital funds, and increase the proportion of direct financing and equity financing." The Central Economic Work Conference at the end of last year had already emphasized the need for continuous deepening of comprehensive capital market reforms, with greater attention to balanced development on both the investment and financing sides, pulling the capital market back from being solely driven by financing into a closed loop of financing, investment, and allocation. Thus, the 2026 capital market policies do not simply aim to "stabilize the market" but, on the basis of stabilizing expectations and confidence, further promote institutional improvements and functional enhancements.

Examining the evolving language in Government Work Reports over the past three years reveals a clear progressive relationship in capital market policy. The 2024 report stressed "enhancing the intrinsic stability of capital markets," focusing on stabilizing the foundation and strengthening resilience. The 2025 report proposed "stabilizing the property and stock markets" and outlined plans to deepen comprehensive investment and financing reforms, aiming to promote medium- and long-term fund inflows and improve market stabilization mechanisms. In 2026, the report, while summarizing the success of "comprehensive measures to stabilize the stock market" and sending positive signals of market recovery and active trading, further specifies key focuses for this year's capital market reforms. Alongside continued emphasis on market stability, it places greater prominence on institutional building and functional improvement, explicitly incorporating the medium- and long-term fund inflow mechanism, investor protection system, venture capital exit channels, and the proportion of direct financing into the reform agenda.

From the perspective of the capital market's own development, the 2026 proposal to "increase the proportion of direct financing and equity financing" has a strong practical basis. According to disclosures from the China Securities Regulatory Commission (CSRC), total equity and bond financing in the exchange market during the 14th Five-Year Plan period reached 57.5 trillion yuan, with the direct financing ratio increasing by 2.8 percentage points from the end of the 13th Five-Year Plan period to 31.6%. Over 90% of newly listed companies in recent years have been technology firms or companies with high technological content, and the market capitalization of the A-share technology sector now exceeds one-quarter of the total. The capital market's capacity to serve technological innovation and the development of new quality productive forces has significantly improved over the past five years. However, compared to developed markets, China's direct financing ratio remains relatively low. There is still room for improvement in terms of optimizing the financing structure, facilitating the science-capital cycle, and building a multi-tiered market. The 2026 report's separate emphasis on "increasing the proportion of direct financing and equity financing" aligns with this trend and underscores the increasingly pivotal role of capital markets in supporting the construction of a modern industrial system.

Overall, the stability of policy expectations stems both from the "stable" undertone of macroeconomic policy and from the continuity and certainty of the capital market reform direction. On this basis, the next crucial step is to further translate "stabilized expectations" into "strengthened functionality," promoting better良性 interaction between the investment and financing sides of the capital market.

The capital market is better balancing financing, investment, and wealth management functions. The report places "further improving the mechanism for medium- and long-term fund inflows" and "enhancing the investor protection system" in a more prominent position. This wording is consistent with the recent direction of capital market reform emphasizing "coordinated development of investment and financing." High-quality development of the capital market requires evaluating both the effectiveness of its financing function and the同步跟进 of investor returns and rights protection.

According to CSRC disclosures, during the 14th Five-Year Plan period, listed companies distributed cumulative "red envelopes" totaling 10.6 trillion yuan through dividends and share buybacks, equivalent to 2.07 times the amount raised through IPOs and secondary offerings in the same period. Thus, the 2026 report's parallel mention of the investor protection system and the medium- and long-term fund inflow mechanism essentially aims to further solidify the foundation for an "investment-oriented market" at the institutional level, enabling the capital market to better balance its financing, investment, and wealth management functions.

Venture capital exit represents the most incremental and structurally significant aspect of this year's capital market部署. The 2024 report emphasized "encouraging the development of venture capital and equity investment," the 2025 report stressed "improving differentiated regulation for venture capital funds" and "cultivating patient capital," and the 2026 report further proposes "expanding exit channels for private equity and venture capital funds." The policy logic has shifted from encouraging development to打通 the cycle.

Venture capital investment is inherently a complete chain of "fundraising, investment, management, and exit." Exit is not a subsidiary环节 but a crucial prerequisite for forming capital succession,收益回流, and reinvestment capability. Data from the Asset Management Association of China shows that as of the end of December 2025, there were 29,820 surviving private equity investment funds with a存续 scale of 11.19 trillion yuan, and 27,342 surviving venture investment funds with a存续 scale of 3.58 trillion yuan. Equity investment and venture capital have reached substantial scale. Currently, large-scale private equity funds are密集 entering the exit cycle, holding assets that include numerous high-quality targets, including hidden champions in细分 fields.打通 the capital cycle and optimizing the exit mechanism is both an urgent demand for venture capital funds and can provide more opportunities for listed companies' mergers, acquisitions, expansion, and industrial layout optimization.

Currently, venture capital exit channels are generally improving but仍有优化空间. Firstly, exit channels remain relatively单一, with strong reliance on IPOs. Alternative exit methods like mergers and acquisitions and secondary funds (S funds) are not yet mature enough, leading to insufficient stability and predictability of exit returns. Secondly, normal exits are still容易 stigmatized in public opinion, with some views simplistically labeling institutional exits as "major retreats" or "harvesting retail investors," making it difficult for projects that should exit to do so smoothly, damaging the reputation of venture capital institutions and suppressing market confidence. Thirdly, exit mechanisms, legal rules, and the market environment are not yet sufficiently smooth. Therefore, the 2026 report's specific focus on exit channels, aiming to solve the "exit logjam" problem for funds, is highly targeted and will be key to打通 the positive cycle of patient capital investment.

The capital market is better serving new quality productive forces and high-quality development. The 2026 Government Work Report calls for intensifying efforts to cultivate and strengthen new growth drivers, adhering to the focus of economic development on the real economy, developing new quality productive forces according to local conditions, and building a modern industrial system. Simultaneously, the report proposes deepening the development and utilization of data resources, improving basic systems for data要素, building high-quality data sets, and enhancing AI governance to solidify the institutional foundation for the digital economy and the "AI+" initiative.

Regarding the innovation system, the report proposes accelerating high-level科技自立自强. It emphasizes leveraging the advantages of the new nationwide system to advance the攻关 of key core technologies across the entire chain, organize and implement major sci-tech projects, and continue to increase the proportion of basic research investment. It also calls for coordinating the construction of national strategic科技力量, strengthening the coordinated deployment of national laboratories, major sci-tech tasks, and major sci-tech infrastructure, and comprehensively enhancing the independent guarantee of basic sci-tech conditions. The report further stresses promoting the deep integration of scientific and technological innovation with industrial innovation, strengthening the dominant position of enterprises in innovation, supporting leading科技 enterprises in牵头 forming innovation consortia, increasing their proportion in undertaking national major sci-tech projects,加强中试验证 platform construction, improving intellectual property protection systems in emerging fields, and accelerating the efficient transformation and application of major scientific and technological achievements.

Focusing on the transformation of科技成果 and enterprise growth, the report explicitly calls for加强全链条全生命周期 financial services for scientific and technological innovation, and for implementing a "green channel" mechanism for listing, financing, mergers, and acquisitions for科技型企业 in key core technology fields on a regular basis. Connecting with部署 like "increasing the proportion of direct financing and equity financing" and "expanding exit channels for private equity and venture capital funds," this signifies that the focus of capital market support for technological innovation is extending from单一 financing support further into a more complete capital formation chain including listing, M&A, and exit, placing greater emphasis on enhancing resource allocation efficiency through market-oriented means and promoting the optimization and upgrading of industrial and supply chains.

Judging from the progress disclosed in the report, the foundation for innovation-driven development is continuously being consolidated: the intensity of nationwide R&D expenditure reached 2.8%, the transaction value of technology contracts grew by 10.8%, the potential of data要素 is being rapidly unleashed, and the added value of core digital economy industries has increased to over 10.5% of GDP. The持续提升 "technology content" of the capital market is forming a tighter共振 with the innovative upgrading of the real economy.

Major engineering projects during the "15th Five-Year Plan" period will become an important抓手 for the capital market to serve high-quality development and practice the "Five Major Articles." The report indicates that the draft "Outline for the 15th Five-Year Plan" proposes 109 major projects across 6 areas, covering a wide range of fields including the development of new quality productive forces, modern infrastructure, integrated urban-rural development, people's livelihoods, green and low-carbon development, and security assurance. Among these, 28 projects are proposed to lead the development of new quality productive forces,部署 around enhancing industrial基础 capabilities and competitiveness, cultivating and developing new industries and tracks,攻关 in frontier technologies, and improving basic innovation capabilities. These major projects balance "hard investment" and "soft construction" and emphasize leveraging government investment to attract participation from social forces. For the capital market, this provides clearer industrial direction and also poses higher requirements for capital organization and resource allocation. Better leveraging the functions of the multi-tiered capital market and promoting the concentration of long-term capital and patient capital towards key areas will help translate the project list into industrial outcomes and development momentum more rapidly.

Overall, the main thrust of 2026 capital market policy can be summarized at three levels: Firstly, continuing to place greater emphasis on "stability," consolidating the trend of market recovery and improvement on the basis of stabilizing the stock market, expectations, and confidence. Secondly, placing greater emphasis on comprehensive investment and financing reforms, promoting the synergistic efforts of key institutional arrangements such as medium- and long-term fund inflows, investor protection, venture capital exits, and mergers and acquisitions. Thirdly, placing greater emphasis on the capital market's function in serving the real economy, particularly in supporting technological innovation and the development of new quality productive forces. For the beginning of the "15th Five-Year Plan" period, a capital market that operates more stably, has more comprehensive systems, and possesses stronger functionality is both an important manifestation of the macro policy priority on stability and a crucial support for accumulating momentum for high-quality development.