Plan values structural reforms
By Richard Fu |
October 20, 2010, Wednesday
|
Print Edition
Print Edition
THE structural reforms highlighted in China's new Five-Year Plan (2011-2015) may slow overall corporate earnings growth, but they signal a positive trend for sectors ranging from farming to cultural entertainment.
The plan suggests the government is willing to tolerate lower growth in gross domestic product as it aims to significantly improve the structure of the economy, analysts said.
China is seeking to achieve "major breakthroughs" in economic restructuring and pledged to lend solid policy support to modern farming, manufacturing upgrades and certain services industries, according to a communique issued on Monday at the close of a four-day Party meeting that approved proposals for the 12th Five-Year Plan.
The plan covering the years ending in 2015 also aims to raise household incomes on a more equitable basis, easing imbalances between rich coastal cities and inland areas. The full text of the plan will be released next year.
Ma Jun, Deutsche Bank's chief China economist, said this suggests corporate profits as a percentage of national income will not rise. He estimated corporate annual profit growth will slow from more than 20 percent at present to about 10 percent or 11 percent by 2015.
The modern agriculture industry to be fostered under the new plan aims at large-scale farming and organic foods. Upgrading of manufacturing facilities and equipment bodes well for the machinery, equipment and new energy sectors, analysts said.
By accelerating the growth of the services industry, companies involved in entertainment, information technology, modern logistics and sports could benefit.
China also said "culture" will be established as a pillar industry. Beneficiaries will include publishers and media companies amid state-led restructuring, as well as film and cartoon makers, according to Guolian Securities analyst He Bingbing.
Sectors to benefit:
Modern agriculture: large scale farming and organic foods;
Manufacturing upgrading: machinery, equipment, and new energy sectors;
Services industry: culture, entertainment, IT, modern logistics, travel, sports, elderly care, and domestic services.
Source: Deutsche Bank
The plan suggests the government is willing to tolerate lower growth in gross domestic product as it aims to significantly improve the structure of the economy, analysts said.
China is seeking to achieve "major breakthroughs" in economic restructuring and pledged to lend solid policy support to modern farming, manufacturing upgrades and certain services industries, according to a communique issued on Monday at the close of a four-day Party meeting that approved proposals for the 12th Five-Year Plan.
The plan covering the years ending in 2015 also aims to raise household incomes on a more equitable basis, easing imbalances between rich coastal cities and inland areas. The full text of the plan will be released next year.
Ma Jun, Deutsche Bank's chief China economist, said this suggests corporate profits as a percentage of national income will not rise. He estimated corporate annual profit growth will slow from more than 20 percent at present to about 10 percent or 11 percent by 2015.
The modern agriculture industry to be fostered under the new plan aims at large-scale farming and organic foods. Upgrading of manufacturing facilities and equipment bodes well for the machinery, equipment and new energy sectors, analysts said.
By accelerating the growth of the services industry, companies involved in entertainment, information technology, modern logistics and sports could benefit.
China also said "culture" will be established as a pillar industry. Beneficiaries will include publishers and media companies amid state-led restructuring, as well as film and cartoon makers, according to Guolian Securities analyst He Bingbing.
Sectors to benefit:
Modern agriculture: large scale farming and organic foods;
Manufacturing upgrading: machinery, equipment, and new energy sectors;
Services industry: culture, entertainment, IT, modern logistics, travel, sports, elderly care, and domestic services.
Source: Deutsche Bank
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