China set to adopt 13th Five Year Plan with focus on reform and doubling of average income

HONG KONG – China’s annual National People's Congress will convene in Beijing on Saturday (March 5), with the meeting to approve the nation’s 13th Five Year Plan - which will have a key focus on reforms aimed at doubling average income by 2020.

Paul Skelton, HSBC's Regional Head of Commercial Banking, Asia-Pacific, says China is laying the foundations for a fundamental economic rebalancing that will change the landscape for Chinese and foreign firms alike.

An increasing emphasis on consumption, innovation, social welfare and healthcare creates new financing needs for companies, and major new markets for enterprises that can adapt their business plans in a rapidly evolving economy”,” he says.

“Meanwhile a move up manufacturing's global chain, away from heavy industry towards high-tech production, creates very real opportunities for international companies with expertise to share.

“Companies in both the manufacturing and services sectors should start reviewing their China growth strategies now to ensure that they are able to capitalise on the country's economic re-balance." 

The French investment bank, Nataxi, believes China will seek to reinvigorate growth expectations by announcing laxer monetary and fiscal policies.

“The elephant in the room, SOE reform to reduce excess capacity, will not be tackled fully but, being an increasingly sour point for investors, there should be a reference to the lack of appetite for zombie companies as well as the availability of fiscal funds to restructure some of those corporates,” Nataxis says.

“This is welcome but it is clearly not enough. We thus expect China to continue to focus on growth and not on reform overall.  www.hsbc.com www.nataxis.com    (ATI).