Meng-Chun Liu, Director of the First Research Division at the Chung-Hua Institution for Economic Research (CIER), stated on September 18, 2026, that China is likely to maintain a security-first policy orientation in the coming years. The Chinese economy faces two primary trajectories. If policy shifts to prioritize economic development, moderate growth may be sustained. Conversely, if security remains the dominant focus, the economy may evolve toward a model of high control and low efficiency, leading to prolonged stagnation pressures. Notably, technological development in areas such as artificial intelligence, quantum technology, and robotics may continue to yield significant breakthroughs, resulting in a scenario where technological advancement coexists with broader economic weakness.
Liu noted that “securitization” has become an increasingly prevalent policy trend among major economies, with particularly pronounced effects anticipated in China. The implications for the Chinese economy can be analyzed from four principal perspectives.
Expanding Securitization Fuels Policy Uncertainty, Risking More Cautious Corporate Capital Investment
First, China’s “holistic approach to national security” spans political, economic, cultural, social, technological, cyber, and additional domains. This approach blurs the distinction between economic activity and security considerations. When security determinations are subject to broad discretion, companies encounter not only measurable compliance costs but also significant policy uncertainty that is challenging to quantify.
Second, Chinese regulators exercise considerable discretion, which complicates companies’ ability to anticipate the scope and outcomes of policy enforcement. In a predictable institutional environment, businesses can typically assess and price risks associated with security controls. However, when policy predictability declines, these risks become unquantifiable uncertainties, often leading companies to delay or reduce irreversible long-term investments.
Third, China’s party-state system functions concurrently as regulator, owner, creditor, and purchaser. It further engages in corporate governance through Party organizations, state ownership, special management shares, and related mechanisms. The overlap of regulatory and ownership roles enables national security and broader policy objectives to exert greater influence over corporate decisions. As a result, companies must account for policy alignment in their investment and operational strategies.
Fourth, China utilizes its state-owned financial system, industrial policies, and administrative resource allocation to pursue strategic objectives. Households and non-priority sectors may absorb some of the adjustment costs associated with these policies. If official performance evaluations increasingly prioritize security, compliance, and risk control, signals from declining economic efficiency may not be sufficient to trigger a prompt policy adjustment.
Security Emphasis Expected to Continue Around the 21st Party Congress as Technological and Economic Trends Diverge
In anticipation of the 21st National Congress of the Chinese Communist Party in 2027, Liu indicated that China is likely to continue prioritizing security in its policymaking. Two potential development trajectories persist. Should economic development regain prominence and the policy environment and market confidence improve, moderate growth may be achievable. Conversely, if security remains the predominant policy objective, China may adopt a structure defined by high control and low efficiency, exerting sustained pressure on long-term economic growth.
Liu suggested that the security-first policy orientation may persist beyond the 15th Five-Year Plan and through the 21st Party Congress. Within this framework, China’s technology sectors are likely to continue advancing, supported by national strategies. Fields such as artificial intelligence, quantum technology, and robotics may achieve further breakthroughs. However, these technological advances may not necessarily result in improved overall economic performance. Instead, China may experience an increasing divergence, with technological progress occurring alongside broader economic weakness. Consequently, assessments of China’s economy should consider not only technological achievements but also structural factors such as policy predictability, private-sector investment incentives, and the efficiency of resource allocation.
Source: United Daily News (September 18, 2026). CIER’s Meng-Chun Liu: China’s Security-First Trend May Persist as the Economy Faces Two Possible Paths. United Daily News. https://money.udn.com/money/story/5603/9763758