Under The "China Dream" Strategy, A New Round Of A Shares Rising Cycle Opens.

"People who ignore the past are just passer by in the future. Ignoring the past countries, facing the changing world, there will be no mature choices or even risks of losing direction. After sixty years, looking back on the five hundred years, we will go all the way to see the evolution of the big powers that are in favor of each other. What we need to do is actually one thing: let history illuminate the future journey."

This is a commentary in the documentary - the rise of great powers.

It pointed out to people that seeking the road of national rise requires a historical view and a strategic view.

So is stock market investment.

In the era of great change, we can not only study stock in the stock market, but we should study the great layout of the "China dream" at the national strategic level, so as to grasp the development path of the stock market.

In the third Plenary Session of the 18th CPC Central Committee, the new historical stage of China's social and economic development was opened. The "Chinese dream of great rejuvenation of the Chinese nation" was put forward. Reform and anti-corruption measures were rapidly promoted in the past year, and the victory of the Fourth Plenary Session of the Fourth Plenary Session - "the rule of law" put forward the historical mission and strong will of the new national leadership collective.

At present, we are in the critical period of "the rise of a great power to a real power" and the realization of the great historical change of "China dream". In the layout of the country, we need to stand at a higher level to view the role of the stock market.

History at home and abroad tells us that the stock market will become a strategic fulcrum for China to realize the road of great power and shoulder the historic mission of realizing the "China dream".

Under this pattern, the A share market in the next two years is expected to usher in a new round of historic opportunities. The fourth cycle of the big cycle of China's stock market may have opened.

Finance is the core of the modern economic system, and the capital market is an important part of the financial system.

Looking back at the history of the evolution of great powers, the most shocking thing is that less than 2.5 of Beijing's Holland (42 thousand square kilometers) has built up a commercial empire that dominates the whole world. It is one of three countries that have gained hegemony in the world in the past five hundred years.

Why? Because she first owned the stock financial market: Holland first established a modern financial and business system, the first Joint Stock Company in the world to gather capital quickly; the first stock exchange in the world, the Amsterdam stock exchange, was established three hundred years earlier than the NYSE; it pioneered the establishment of a modern Bank and created a credit system that has been used all over the world.

Take the rise of the United States as an example, Wall Street has played an irrefutable historical role in different historical periods.

From supporting the federal government's low-cost financing in the civil war to achieve North South unification, to promote the first wave of heavy industrialization brought by the United States in the late nineteenth Century, from the financial hegemony established by the Wall Street, the United States gained huge benefits in the two World War to promote the new economic pformation since the last century in the United States since 80s.

Especially in today's knowledge-based economy era, the capital market combines knowledge and economy, pushing the rapid development of science and technology in the United States, and maintaining the leading position of the United States in the field of scientific and technological innovation with strategic significance.

Such as Intel's listing in 1971, Apple's listing in 1980, and Microsoft's listing in 1986 led to the rapid development of PC industry in the United States. 1990's listing on CISCO and the listing of Lucent in 1990 laid the leading position of the United States in the communications industry. Subsequently, the listing of YAHOO in 1996, the listing of amazonson and the listing of Google Google made the United States the hegemony of the Internet age.

Entering the new century (002280), the financial crisis triggered by the subprime mortgage crisis in 2008 has devastated the American strength. But with financial hegemony, Wall Street, by exporting the global monetary tax to support the development of science and technology and the new economy in the US, has again achieved the technological giant in the era of mobile Internet such as apple and Facebook, rescued the United States from the mire, and made the current us the best economic state in the developed economies.

It can be seen that the powerful Wall Street has long been an important pillar for the establishment and maintenance of the status of the world's superpower.

Looking back on the history of China, the Qing Empire was in the first place in the world for a long time in nineteenth Century, but GDP could not resist the invasion.

According to Berok, an economist in economic history, the world's first place in China's total economic volume was not replaced by the United States until 1890.

As early as 1820, China's gross domestic product accounted for 28.7% of the world's GDP, much higher than that of GDP and 5.2% of Japan's GDP and 3.1% of Japan's GDP.

At that time, although China was a weak country with huge economic volume, of course, there was a fundamental reason behind the backward feudalism system, but the lack of modern financial system and system was also one of the important factors.

In fact, since the establishment of the Shanghai stock exchange in 1990, the stock market has undertaken a number of important tasks for the success of reform and opening up.

In the early 90s of last century, the establishment of the domestic stock market laid the foundation of the modern enterprise system - the shareholding system; at the end of 90s, it provided huge financial support for the state-owned enterprises to get rid of difficulties; in the 2006-2007 year, the target of reforming the listed companies' share reform, including two barrels of oil and four lines, was raised, and the level of securitization of state-owned assets was upgraded. Since 2009, the rapid development of the emerging economy and the realization of a large number of small and medium enterprises based GEM Listing and financing have promoted the pformation and upgrading of China's economy.

We can see that under the modern market economy system we must establish a strong capital market and take due historical mission in the strategy of great power: promote the benign development of the major industries, boost the economic pformation and upgrade, and promote the Chinese dream of realizing the great rejuvenation of the Chinese nation.

At present, China's economy is in the historical turning point of the old economy, which is driven by the "investment + export" mode in the first ten years, to the new economic pformation of "consumption plus science and technology innovation".

In the pition period, the potential financial system risk brought by the extreme development of the original economic mode is becoming the primary challenge for the success of the new economic pformation.

Therefore, resolving the potential financial risks and winning time for deepening reform is becoming one of the tasks of the current stock market.

On the one hand, China's non-financial sector has a high leverage ratio, and risks are highlighted under the background of overcapacity.

In order to resist the global financial crisis in 2008, China launched a large-scale stimulus policy in 2009, and domestic leverage increased sharply. The proportion of corporate debt to GDP rose from 95% in 2008 to 125% in 2012, an average annual increase of about 6 percentage points, and the A asset liability ratio of non-financial enterprises also increased from 53% to 60% during the same period.

According to the report released by standard & Poor's in June 15th this year, as of the end of last year, Chinese enterprises borrowed 14 trillion and 200 billion US dollars, which had exceeded US $13 trillion and 100 billion, but the cash flow of Chinese enterprises continued to deteriorate from 2009 to 2009.

Therefore, once the credit risk erupts, the market interest rate will rise sharply, and the "Minsky moment" may come, thus becoming the biggest threat to China's economy.

On the other hand, the financial sector is also facing many risks, such as the real estate bubble burst, the risk of local debt financing platform, and the default of bank / trust financial products.

After more than ten years of rising cycle since 1998, the real estate market has clearly begun to enter the downward cycle of the big cycle.

Although the proportion of the first suite of personal housing loan is large and the risk is small, the development loan with land as the main collateral will still be directly affected by the fluctuation of house prices.

More importantly, local debt risk and trust products as shadow banks are closely related to the real estate market.

This year's local real estate bubble burst (such as Wenzhou, Ordos (600295)), trust defaults, etc., warning how regulators effectively resolve the risks directly related to the stability of the domestic financial system, is the key to China's economic pformation.

While the debt rate is high, we see that the stock market as a direct financing platform for enterprises, the proportion of direct financing that has been completed for a long time has been on the low side of the scale of social financing.

This figure is 42.3% in China in 2012, while 86% in the United States, and even 70% and 69% in other emerging market countries, such as India and Brazil.

The low proportion of direct financing not only makes financial risks highly concentrated in the indirect financing areas such as banks, but also increases the overall leverage ratio of enterprises, and also affects the effective demand satisfaction of the real economy.

Therefore, in this critical period, how to play the role of direct financing in the stock market and resolve potential financial risks are related to the core strategy of national development.

By strengthening and strengthening the stock market, we can introduce a large number of social capital, increase the proportion of direct financing, replenish the capital of large scale enterprises, reduce the leverage ratio quickly, and defuse the risk of enterprise debt.

At the same time, through the reform of state-owned enterprises, we will improve the rate of securitization of state assets, gradually reduce the level of local debt, support technological innovation and the development of new industries, and promote the formation of new forces for economic growth.

In the face of big times, the stock market needs to shoulder heavy responsibilities.

In addition, our current external environment is not ideal.

Now the decline in crude oil prices and commodity prices seems to be in China's favor.

At present, China's manufacturing industry has a serious surplus capacity. With the gradual stabilization and growth of the US economy, China's exports should also improve, but the United States, Japan and other countries will return the high-end manufacturing industry to the United States and Japan on the one hand. On the other hand, the middle and low end manufacturing sector will shift to Latin America and turn to Southeast Asian production.

Obviously, China's exports to the US will be even more difficult after that.

We can see that the stock market will become more and more important to revitalize the whole Chinese economy in the future. In turn, the stock market needs to go out of the rising market more and more.

Reducing the high leverage ratio of enterprises and resolving local debt risks all need economic pformation, while economic pformation takes time and needs more capital. The key lies in the stock market.

Only when the stock market rises, slowly producing the wealth effect and expanding the direct financing will it solve the above problems, win the time for the reform and win the time for the success of the pformation.

It can be said that the more difficult the Chinese economy and the greater the potential financial risk, the greater the need for the stock market to go up.

At the same time, from the external environment, with the withdrawal of QE from the United States, the pressure of global capital returning to the US will inevitably increase. The situation in China will become more and more serious. It will also need the rise of the A share market to share the pressure.

In the fourth Plenary Session of the 18th CPC Central Committee October 23rd, when the curtain fell, the General Assembly passed the decision of the Central Committee of the Communist Party of China on comprehensively advancing major issues of governing the country according to law.

This conference clears up the strategy of administering the country according to law. It points out that power should be installed in the cage of rule of law so as to better protect the rights and interests of the masses.

It can be seen that the decision made a framework for scientific legislation, administration according to law, and judicial reform. For instance, in the judicial reform part, there are many specific contents, such as the establishment of circuit courts by the supreme law, and the establishment of inter regional circuit courts.

To some extent, the decision will comprehensively build up the framework of China's modern judicial reform.

The communiqu of the fourth plenary session also stressed the importance of governing the country according to law to economic pformation and upgrading.

The communiqu pointed out that China's dream of building a moderately prosperous society in an all round way and realizing the great rejuvenation of the Chinese nation should comprehensively deepen the reform, improve and develop the socialist system with Chinese characteristics, and improve the party's ruling ability and governance level, so we must comprehensively promote the rule of law.

This means that the future management will make a good start for the next year by comprehensively deepening the reform and comprehensively promoting the rule of law in order to stabilize the economy. At the same time, seize the important strategic opportunities to help China's economic pformation and upgrading.

The rule of law is an important prerequisite for the success of economic pformation.

From the international experience, whether the emerging market countries can succeed in economic pformation, whether they can avoid Latin Americanization, and whether they can build a fair, fair and market-oriented system will be the key.

This is also the logic of the Fourth Plenary Session of the market and the rule of law.

With the opening of the medium and long-term reform framework under the rule of law, we have reason to believe that China's economy will succeed in achieving pformation and upgrading, thus laying the foundation for the long-term A bull market.

Looking ahead, China's economy is no longer able to sustain the growth rate of over 8%, and the probability will remain at about 7.3%.