5% Floor Confirmed or Broken Through? 5 Variables China's 2026 NPC Throws at Korea's Exports, Semiconductors, and AI Amid the Iran War
As China's Two Sessions (NPC & CPPCC) open on March 4, 'domestic demand, AI, macro policy, and the 15th Five-Year Plan' have emerged as key keywords. Whether China maintains its 5% growth target and the direction of its AI policy — amid the Iran War and the KOSPI crash — are expected to directly impact Korea's semiconductors, exports, and supply chains.
One-line hook: On the very day the KOSPI recorded its steepest single-day drop ever (-7.24%), another major variable for Korea's economy is about to unfold in Beijing.
TL;DR
- March 4 (Wed): CPPCC opens; March 5: NPC opens — China's largest annual political event, the Two Sessions, gets underway.
- Key focus: whether the 5% growth target will be maintained, AI and advanced technology promotion policies, and finalization of the 15th Five-Year Plan (2026–2030).
- With the Iran War, U.S. tariff pressure, and sluggish domestic demand converging, Premier Li Qiang's policy message will be a variable that moves global markets.
- Korea has five direct links: recovery of exports to China, semiconductor supply chains, AI cooperation and competition, and more.
1. The Facts: What Is the 2026 Two Sessions?
China's largest annual political event, the Two Sessions (兩會), is composed of two bodies:
- CPPCC (Chinese People's Political Consultative Conference): Opens March 4; serves an advisory role
- NPC (National People's Congress): Opens March 5; the highest legislative body
Each body convenes for roughly one week. On the opening day of the NPC, Premier Li Qiang delivers the Government Work Report, officially announcing the year's GDP growth target. This session is particularly significant as it is set to finalize the 15th Five-Year Plan (2026–2030).
China recorded growth of 5.2% in 2023, 5.0% in 2024, and 5.0% in 2025. Experts widely expect '5%' to again be presented as the psychological floor, but new variables — U.S. tariffs and the Iran War energy shock — have entered the equation.
2. Why Is This Attracting Attention Now?
Leading Chinese economic media have highlighted the following key keywords for the 2026 Two Sessions:
The Iran War variable is a new addition. Since China depends on the Hormuz Strait for roughly 40% of its crude oil imports, the risk of a blockade means rising energy prices could deal a direct blow to China's domestic recovery plans.
3. Context: Five Direct Links to Korea
① Whether Exports to China Can Rebound
China is Korea's largest trading partner. Korea's exports to China showed a modest recovery in 2025 compared to the previous year, but Chinese domestic demand needs to revive for demand for Korean consumer goods and intermediate materials to grow. If the Two Sessions announce concrete consumer stimulus policies, it would be positive news for Korean chemical and consumer goods companies.
② Semiconductor Supply Chain Restructuring
China is expected to set semiconductor self-reliance as a core goal in the 15th Five-Year Plan. If policies to nurture Chinese memory firms such as CXMT (Changxin Memory) and YMTC are strengthened, competition with Samsung Electronics and SK Hynix will intensify. On the other hand, China's restricted access to advanced products like High Bandwidth Memory (HBM) means Korea's technological edge is likely to hold for the time being.
③ AI Ecosystem Competition and Collaboration
The faster China's 'AI+' policy accelerates, the narrower the window of opportunity for Korean AI startups and conglomerates in the Chinese market. The key challenge is how to translate the global competitiveness of Korean AI models — such as LG Electronics' K-EXAONE and KT AI unveiled at MWC 2026 — into a China market strategy following the Two Sessions.
④ China's Potential Role as Mediator in the Iran War
China brokered the Saudi–Iran diplomatic normalization in 2023. It may once again attempt a diplomatic role to achieve an early end to the current U.S.–Iran war, which could be a variable that eases the Hormuz crisis. It is worth watching whether any Iran-related messaging appears in China's external communications during the Two Sessions.
⑤ The Won Exchange Rate and Financial Market Linkages
If China opts to lower its growth target or pursue a yuan depreciation policy, upward pressure on the USD/KRW exchange rate will increase. With the KOSPI already having recorded its largest-ever single-day drop, an additional shock from China would place the Korean financial market under double pressure.
4. Outlook: Can 5% Be Sustained?
Expert forecasts are divided into two camps.
Optimistic view: The Chinese government will throw all available fiscal and monetary tools at achieving 5%. Special treasury bond issuance, consumer vouchers, and AI infrastructure investment would generate short-term stimulus effects.
Pessimistic view: The combined impact of 25% U.S. tariffs and the Iran War energy shock makes a slowdown in exports and manufacturing unavoidable. Some have raised the possibility of a downward revision to a 4.5% target.
For Korea, the picture is a sensitive fork in the road: a maintained 5% target brings hopes of export recovery to China, while a downward revision would hit the semiconductor and chemical sectors.