I. Core Issues and Major Trend of Current Economy
Slow growth in China. Against the backdrop of population aging and industrialization of heavy and chemical industries, the pivot of economic growth rate will show a downward trend in the coming five years. Uncertainties remain out there when it comes to whether the economy will stabilize in 2016.
Weak global economic recovery. Worldwide population aging brings about weak demands across the world, and it's expected that marginal demand will improve in 2016. The United States will lead the recovery, initiating the slow interest rate rise process. In the meantime, global asset allocation will be subject to variations.
Economic restructuring. China is now standing at a crucial juncture of falling tide of old economy and the transition of new economy. The mismatched supply structure couldn't meet newly increased demands. Industrial growth slows down, the service sector accounts for a larger share, industrial and consumption upgrading is expected.
Decreased return on assets. Long-term balance sheet expansion reduces the pivot of global return on assets, the rate of return of real economy during the economic transition period is on the decline, and the expected rate of return of funds is relatively high, leading to the features of asset shortage. Generally speaking, the return on assets is in for a downward trend.
II. Government Policy Trend Forecast and Analysis
Fiscal policy will become more proactive, while monetary policy will be neutral and relatively loose. It's expected to put weight on proactive fiscal policy, deepen reform of finance and taxation systems, prudently loosen monetary policy, serve structural reform, continuously press ahead with the internationalization process of RMB, and make exchange rate more flexible.
Government policies will avoid the hard landing of old economy, and cultivate the development momentum of new economy. Government policies will advance the replacement of local government debt, iron out declining government demand, advance the "One Belt One Road" strategy, avoid hard landing of de-capacity, cultivate emerging industries by relying on market force, and develop capital market to support structural transformation.
Efforts will be made on both supply and demand sides to improve the total factor growth rate. Government policies will add demographic dividend, optimize human resource allocation, reduce corporate cost, improve capital efficiency, enhance technological innovation, and stimulate institutional vigor and vitality.
III. Industrial Investment Opportunities in the 13th Five-year Plan Period
Opportunities of industrial and consumption upgrading. Made In China 2025 is the main orientation of China's manufacturing industry in the future. When it comes to the demographic structure, children, post-90s, and the elderly people are three major groups with marginal consumption potential. Beyond that, tourism and relaxation, culture, education, entertainment, medical and health care industries merit attention.
Opportunities of new-type urbanization. New-type urbanization is the new driving force of economic growth, stimulates infrastructure investment and real estate sales, promotes consumer demand and industrial upgrading, and facilitates the optimized allocation of resources among regions. Specifically, high-and-new-technologies, modern agriculture, and urban commerce enjoy opportunities for investment.
Opportunities of the “One Belt One Road” strategy. Thanks to the strong promotion of the Central Government, the "One Belt One Road" strategy embarks on the fast track. Southeast Asian economy grows rapidly, showing a broad market space. The “One Belt One Road” strategy is beneficial for exporting advantageous capacity and making overseas investment allocation.
Opportunities of the development of the financial industry. Financial reform rapidly promotes the formation of a new pattern, continuously improves the capital market system in the 13th Five-year Plan Period, optimizes the financing structure of corporate sector, advances reforms of exchange rate and interest rate, cuts back on corporate financing cost, improves the layout of opening up, and promotes the orderly mobility of factors within and without China. The size of capital market is expected to increase, and asset frequency spectrum enjoys a greater space for innovation. Internet financial ecology picks up steam.