Services sector, stock market seen as keys for 2019
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.