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  Red Chip Trend
China's 12th Five Year Plan 
In the previous issue, we discussed the industrial structure transformation and urbanization in China. This time, I would like to look into another big topic: 12th Five-year Plan.
We are about to enter into the second decade of the 21st century, meaning that the 12th Five-year Plan era (2011-2015) will arrive soon. The plan is under massive attention from global markets as it is the first five-year plan after the "financial tsunami". China, a global economic powerhouse in recent years, has to find new catalysts for future growth as the government may withdraw previous measures used to stimulate the economy, while general demand from Europe and the U.S. may stay sluggish after a strong rebound last year.
The industrial structure reformation, though a tough test, is essential for China's economic development. Meanwhile, growing concerns on uneven distribution of wealth will inevitably lead the government to address the income disparity issue, which will involve reforms in social welfare, labour rights protection and health care. There are also strong voices in China calling for more local consumption and less export. After the global financial crisis, it is widely believed that the ongoing rebalancing may take place in the next three years. This will fundamentally change the consumer driven model in the U.S. and subsequently may slowdown China's export growth rate. China has heavily relied on exports and fixed asset investment, the contribution of consumption to GDP is relatively low compared to many other countries.
In terms of sector selection, alternative energy will come up in many people's mind. China has unveiled its own target for reducing carbon emission during last year's Copenhagen Conference. Reports revealed that the nation will invest RMB5 trillion in hydropower, natural gas, wind power, and solar energy projects in the coming ten years. Sectors related to heavy machinery and technological equipments may also benefit from favorable policies.
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Mr Peter Pak, Executive Director
BOCI Research Limited |
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