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Over the next five years, China will be shifting its focus to more balanced development and what it sees as quality growth. Its two main strategies are promoting innovation-with the government-backed industrial upgrading-and strengthening the rural economy. This shift will lead to massive investment and fresh, wealth-making opportunities. In the stock market, innovative enterprises will see new growth prospects. Agricultural concept stocks, companies in energy conservation and some cyclical stocks stand to gain with the help of government assistance.
Here are the points of views of three experts on investment opportunities in different sectors:
Stock Market
He Qiang (professor with the School of Finance of the Central University of Finance and Economics): China's stock markets have been surprisingly counter-cyclical.
When the economy is strong, they have lost ground. If that pattern continues in the near future, it will actually provide some very attractive investment opportunities.
Moves to liberalize certain policies will bring fresh opportunities. If there are some changes in macro-economic controls this could be very significant for market development.
While I do expect some impact from the implementation of new policies (such as the reform of state shareholdings) these measures will have only a temporary effect. There may be some downward adjustment but it won't be a repeat of the broad market retreat that we saw in 2005.
In some respects this is healthy because you don't want a stock market that just keeps going higher. That is unsustainable. A healthy pause now and then allows more funds to enter the market and build a base for future advances.
There are some opportunities in the agricultural sector, but the track record of listed agricultural companies must be improved. If they can't boost their fundamentals they will be nothing more than tools for speculative trading.
New forms of energy are another promising area but so far they are largely in the "concept" stage. Without concrete results this won't be suitable for investment. Technical hurdles need to be overcome while commercialization in many cases is still not quite there.
Digital TV, 3G-mobile phones and the next generation of Internet technology all will provide investment opportunities. The so-called 3G or third generation mobile phone technology is already with us but it needs to be fully endorsed by the marketplace. Costs still need to be addressed and we still need reasonable applications that make economic sense. Games for mobile phones have bright prospects. These sectors have a broad and reliable market base. Text messaging and games are certainly a direction for future development.
Industry
Gao Huiqing (Director of the Strategic Planning Division of the Development Research Department of the State Information Center): The 11th Five-Year Plan will have an impact well in the future. The government will be setting standards in a number of areas. In housing, for example, developers will have to provide smaller apartment units for people with smaller budgets, and not just focus on the luxury end of the market. Factories will have to cope with stricter standards for dealing
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