While President Xi revealed his thoughts on the Party’s development goals, details and approval of the plan is expected in March next year.
High on the agenda is the goal of doubling China’s GDP and household income by 2020, from 2010 levels. Axa IM noted that this implies an average growth rate of at least 6.5% for 2016-2020. China’s official growth target for 2015 is 7%.
Aidan Yao, senior emerging market economist at Axa IM said: “The policy stance [means that the Chinese government] will remain accommodative in the coming years to prevent a sharper growth slowdown.
“China will have to speed up structural reforms and foster new engines of growth,” Yao added.
Axa IM also noted that the abolishment of the One-Child Policy was also well received, but it adds that this change is too small to affect China’s demographic trend. BlackRock said earlier this week that the relaxation of the one-child policy could help boost near-term demand for child-related consumption.
President Xi is also placing emphasis on developing China’s new consumption engines, which include information technology, green technology, smart manufacturing, biotechnology and healthcare.
“Stocks in these sectors have led the overall market recovery in recent weeks,” Yao said.
Raymond Gui, lead portfolio manager at Income Partners expressed a similar sentiment. Speaking at Fund Selector Asia’s Investment Forum in Singapore last week, Gui noted that the service industry takes up half of China’s economy, and has become more resilient in this round of economic slowdown.
“Research shows that the new generation consumers tend to spend more of their income than the older generation. Real income will continue to grow at high single-digit levels,” Gui said.
