Ser­vices sec­tor, stock mar­ket seen as keys for 2019

China Daily European Weekly - - Business - By ZHOU LANXU [email protected]­nadaily.com.cn

The open­ing-up of the ser­vices sec­tor and ris­ing in­vestor con­fi­dence in the stock mar­ket will aid China in achiev­ing stable eco­nomic growth next year, ac­cord­ing to an­a­lysts .

At a meet­ing held on Dec 13 by the Po­lit­i­cal Bureau of the Com­mu­nist Party of China Cen­tral Com­mit­tee it was de­cided to up­hold “speed­ing up all-around open­ing-up” as one of the coun­try’s ma­jor tasks in 2019, ac­cord­ing to a state­ment re­leased after­ward.

The state­ment also said China should “ex­pand open­ing-up at a high level” next year.

The state­ment im­plied that more re­lated poli­cies are in the pipe­line for next year, ac­cord­ing to Hua Changchun, chief econ­o­mist of Guo­tai Ju­nan Se­cu­ri­ties.

Hua says those poli­cies are likely to cover the fi­nan­cial in­dus­try and other parts of the ser­vices sec­tor, and even some mo­nop­oly in­dus­tries such as en­ergy.

“To off­set eco­nomic down­side risks next year, China should ex­pand its open­ing-up of the ser­vices sec­tor, in­clud­ing the health­care and ed­u­ca­tion in­dus­tries, where strong but un­sat­is­fied de­mand ex­ists,” says Zhang Zhi­wei, chief China econ­o­mist at Deutsche Bank.

For­eign ser­vice providers’ in­creas­ing par­tic­i­pa­tion in the Chi­nese mar­ket, Zhang says, will un­leash the po­ten­tial of do­mes­tic de­mand and en­hance pro­duc­tiv­ity in the do­mes­tic ser­vices sec­tor, thus buoy­ing the econ­omy.

A slew of fi­nan­cial open­ing-up poli­cies have come into force this year, in­clud­ing al­low­ing for­eign share­hold­ers to con­trol se­cu­ri­ties firms, fund man­agers and fu­tures com­pa­nies in China.

Dong Dengxin, di­rec­tor of the Fi­nance and Se­cu­ri­ties In­sti­tute at Wuhan Uni­ver­sity of Sci­ence and Tech­nol­ogy, says the state­ment im­plies that China’s fu­ture will fo­cus on higher-qual­ity growth.

“For in­stance, in­stead of ex­port­ing a large vol­ume of goods with low added value, China is try­ing to pro­vide the world with goods with higher qual­ity and more tech­nol­ogy in­no­va­tion,” Dong says.

It was de­cided at the meet­ing to add “raise mar­ket con­fi­dence” as one of the au­thor­i­ties’ work­ing ob­jec­tives, and the ob­jec­tives of sta­bi­liz­ing em­ploy­ment, the fi­nan­cial mar­ket, for­eign trade, for­eign in­vest­ment, do­mes­tic in­vest­ment and ex­pec­ta­tions were up­held.

“Re­cent eco­nomic data show that mar­ket en­ti­ties — both en­ter­prises and in­di­vid­u­als — have be­come less con­fi­dent about eco­nomic prospects,” says Liu Chun­sheng, an as­so­ciate pro­fes­sor at Cen­tral Uni­ver­sity of Fi­nance and Eco­nom­ics.

This has made it im­por­tant to in­cor­po­rate mar­ket con­fi­dence as a pol­icy goal, as mar­ket con­fi­dence dic­tates many of the de­ci­sions re­lat­ing to in­vest­ment and con­sump­tion, Liu says.

Tang Yao, an as­so­ciate pro­fes­sor at the Guanghua School of Man­age­ment at Pek­ing Uni­ver­sity, re­gards boost­ing the stock mar­ket as key to rais­ing mar­ket con­fi­dence.

“As long-term in­vest­ments en­ter the mar­ket as a re­sult of ear­lier pol­icy ad­just­ments, the A-share mar­ket will help to sta­bi­lize ex­pec­ta­tions,” Tang says.

That in­cludes funds man­aged by wealth man­age­ment bank sub­sidiaries and for­eign cap­i­tal brought in by the up­com­ing Lon­don-Shang­hai stock con­nect pro­gram will pro­vide an­other an­chor for the mar­ket, he says.

The pro­fes­sors also say in­vestor sen­ti­ment, ul­ti­mately, re­lies on eco­nomic fun­da­men­tals, and the vow at the meet­ing to “in­no­vate and im­prove macroe­co­nomic reg­u­la­tion” res­onated with them.

“The gov­ern­ment should launch tar­geted poli­cies to solve prob­lems faced by dif­fer­ent in­dus­tries and re­gions, rather than im­pos­ing the same pol­icy stan­dards in all cir­cum­stances,” Liu says.

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