2024 RT Amination Banner.gif

China Daily

Extra> 19th Party Congress> Content
Friday, October 20, 2017, 21:44
JP Morgan sees continued reform, sustainable growth as key congress themes
By Duan Ting
Friday, October 20, 2017, 21:44 By Duan Ting

Continuous reform and long-term sustainable economic growth, rather than a change of agenda, are key messages from the 19th National Congress of the Communist Party of China opening in Beijing on Wednesday, Jing Ulrich, managing director and Asia Pacific vice-chairperson at JP Morgan Chase, said on Friday. 

The Communist Party of China (CPC) opens the 19th National Congress at the Great Hall of the People in Beijing, capital of China, Oct 18, 2017. (ZHANG DUO/ XINHUA)

Ulrich said the report to the congress by Secretary General Xi Jinping outlined a strong blueprint for China for the next five years.Key points raised are that the authorities aim to make China a moderately prosperous society by 2020 and a fully developed nation by 2050. These are clearly very significant targets. They indicate that the leaders would focus more on the quality of economic growth, she ventured.

ALSO READ: CPC stresses socialism with Chinese characteristics as congress opens

Ulrich said the report to the congress by Secretary General Xi Jinping outlined a strong blueprint for China for the next five years

Long-term structural reform remains a key topic at the meeting, Ulrich said. She said this includes such areas as developing higher-end manufacturing, better utilizing technology, big data and artificial intelligence, boosting consumption to a new level with the emerging sharing economy. It also includes moving industrial development toward the value-added part of global supply chain and continuous corporate reforms which includes structural consolidation and strategic reorganization.

She said the government will continue its opening-up policy with the Belt and Road Initiative.

For financial markets, continuous financial leverage in the next several years is expected, Ulrich said. She said the State-owned enterprise reform in the past two to three years had focused on attracting social and private investments into the State-owned sector, mergers and acquisitions among SOEs, and managing capital more efficiently.

READ MORE: Xi Jinping lays out future direction of party

Going forward, she believes SOE reform at central government level will focus on three types of companies including creating industrial conglomerates, national investment companies and national operating companies.

She said the government will also encourage de-risking in the equity market, supporting long-term valuations so JP Morgan remains overweight on the Chinese mainland’s equity market. Strong earnings growth, especially from new economy sectors, is expected. JP Morgan sees the MSCI China Index at 95, or 105 as the bullish target, by the middle of next year.

In terms of important sectors for JP Morgan, Ulrich cited e-commerce, insurance, banks and consumer sectors. The property sector has done well this year so JP Morgan has adjusted the rate to neutral.

She also expects GDP growth to be 6.8 percent this year driven by domestic demand.

Discussing the concept of a “super regulator” role, Ulrich said the idea had been discussed for many years. As all these regulatory agencies have their own frameworks, it is difficult to create a super regulator to coordinate all the agencies. However, better cooperation is expected among the agencies.

Involvement by foreigners in China’s bond market is still limited in terms of the interbank bond market. It will take years to improve their participation, by which time China will have more diversified products, including commodities, Ulrich said.

tingduan@chinadailyhk.com

 


Share this story