What are experts saying about the outlook for China and emerging-market internet and consumption — and where global investor sentiment is heading into 2026?

Analysts project a challenging outlook for China's domestic consumption into 2026, driven by a fundamental disconnect between government rhetoric and policy action . While Chinese leadership increasingly acknowledges weak domestic demand as a long-term strategic problem [12, 14], concrete policies remain firmly anchored to a supply-side strategy of industrial and technological upgrading [2, 20]. The consensus view is that Beijing will not pivot to large-scale consumer stimulus, opting for policy continuity unless faced with a severe economic shock . This inertia is compounded by structural drags, including a weak property sector that suppresses household wealth and confidence and an industrial sector that has created **no net new jobs in over a decade** . While one expert notes that regulators are working to remove some constraints on consumption , the prevailing expectation is for China's economy to continue muddling through, with persistent deflationary pressures and anemic consumer activity [2, 18].

China's focus on industrial overcapacity is creating significant external risks, with analysts warning of a new "China shock" to the global economy . The intense domestic price competition, described as "involution," is being exported as Chinese firms dump excess supply into international markets, creating deflationary pressures abroad [2, 21]. This trend is expected to provoke significant trade friction and protectionist responses from trading partners, with a high likelihood of increased anti-dumping actions [16, 17]. Experts predict the U.S.-China trade war and associated tariffs will persist through 2026 , and any economic truce is fragile and at risk of breaking down over geopolitical disagreements . Some analysis suggests China may attempt to mitigate this by shifting investment from hyper-competitive sectors like EVs to other areas like petrochemicals and steel to maintain GDP growth targets .

In contrast to the cautious outlook on China, global investor sentiment for 2026 is broadly constructive, with a clear preference for other emerging markets and AI-related themes . JP Morgan holds a bullish view on global equities, forecasting **10-25% upside** for the year, and specifically highlights Korea, India, and Brazil as markets positioned for potential outperformance [1, 8, 24]. This optimism is overwhelmingly driven by the artificial intelligence investment cycle, which is viewed as being in the early stages of a multi-year rollout . Rapid AI-related capital expenditures are expected to continue, fueled by a competitive race between the US and China [3, 4]. This creates a divergent global economy, with strong, AI-driven investment juxtaposed against weaker labor market dynamics , but the secular tailwinds from AI are expected to support risk assets and drive market performance .