The Chinese government’s latest policy outline should lead to a much larger consumer economy and more manageable—but still ambitious—growth over the next five years. However, a new China brings plenty of changes to the country’s investing dynamic. Here, I give you ten stocks to consider.
Meet the new and improved China.
The government released the draft of its next five-year plan—its 12th—on March 5. The plan includes soaring goals written by numbers-obsessed bureaucrats (3.3 patents for every 10,000 people, for example). It also commands the uncommandable, such as improved democracy.
This latest plan lays out a major shift in the Chinese economy. It calls for slower growth, increased domestic consumption, cuts in water and energy consumption per unit of GDP, a shift toward a service economy, an increase in urbanization and a 13% annual increase in the minimum wage.
Here are some of its major themes:
Clearly, if you're invested in China or interested in investing in China, you should tweak your investment strategy. But how, exactly?
The final versions of previous five-year plans haven't deviated much from the draft released at the start of the meeting of the National People's Congress. So the outlines of this draft plan are likely to be very close to the final plan itself.
As I wrote in a March 7 post on my site, I don't think there's any reason to doubt that China's leaders take these goals seriously and intend to reach them. But I do doubt that they can actually deliver on all of them.
This isn't Chairman Mao's command economy anymore. It's important that investors incorporate some assessment of "commandability" in their investment strategy, to take account of what will actually get accomplished and what are just words on paper.
Next: Where to Invest