Investment Opportunities Under 20 Key Objectives Of The 14Th Five Year Plan

On March 11, 2021, the fourth session of the 13th National People's Congress voted and passed the fourteenth five year plan for national economic and social development of the people's Republic of China and the outline of the long-term goals for 2035 (hereinafter referred to as the outline of the plan). On March 12, the full text of the outline of the plan was broadcast.

The full text of the outline consists of 19 chapters and 65 chapters. It not only sets 20 major indicators for economic and social development in the next five years, but also defines a number of major initiatives and major arrangements, including 102 major engineering projects.

To promote high-quality development during the "14th five year plan" period, we must base ourselves on the new development stage, implement the new development concept, and construct a new development pattern. This strategic orientation runs through the whole chapter of the outline of the 14th five year plan.

Under the guidance of "double cycle", the consumer industry may present new characteristics and investment opportunities during the "14th five year plan". -Photo by Gan Jun

New target releases new signal

The outline of the plan has set 20 main objectives for economic and social development during the 14th Five Year Plan period, mainly covering five aspects: economic development, innovation driven, people's well-being, green ecology and security. Compared with the 13th five year plan, the outline of the plan has expanded the plate coverage and simplified the total index.

The policy shift embodied in the economic and social development goals during the "14th five year plan" period is the most important thing for all institutions to interpret the outline of the plan.

In terms of economic development, for the first time, the outline of the plan did not set an expected index for the average annual growth rate of GDP in five years, but replaced it with the expression "keep it in a reasonable range and propose it according to the situation in each year".

At the same time, the target setting of "total labor productivity growth" and "per capita disposable income growth" are also linked to GDP growth. The former requires "higher than GDP growth", while the latter requires "basically synchronous with GDP growth".

In this regard, the fixed income / macro team of Huatai Securities pointed out that there was no preset GDP growth target, which reflected the "emphasis on quality and light on speed" in the planning outline.

"On the one hand, considering the greater uncertainty of the external development environment, on the other hand, it is intended to guide attention to the quality of development and solve the problem of unbalanced development, so as to leave room for promoting the reform task and economic transformation, reduce policy incentives, drink poison to quench thirst, and exchange short-term for long-term." Huatai Securities said.

In the aspect of "innovation driven", the outline of the plan requires that the target of "the growth of R & D investment of the whole society" should be less than 7%, and that "the investment intensity should be higher than the actual situation during the 13th five year plan".

In the 13th five year plan, the number of invention patents per 10000 people is changed to the number of high-value invention patents per 10000 population. At the same time, the planning outline adds an indicator of "the proportion of the added value of core industries in the digital economy to GDP" and sets a growth target of 2.2% (from 7.8% in 2020 to 10% in 2025).

Compared with major developed countries, China's R & D investment still has room for improvement. According to world bank data, as of 2018, China's R & D expenditure accounted for 2.19% of GDP, lower than that of the United States and Japan (2.84% and 3.26% respectively).

The strategy team of YueKai Securities pointed out that the above changes mean supporting the increase of R & D investment from the policy side. In the future, the policy will promote the deep integration of digital technology and the real economy, enabling the transformation and upgrading of traditional industries, and the digital economy is expected to usher in rapid development opportunities.

In the case that the overall number of indicators has been simplified compared with the 13th Five Year Plan period, the "people's livelihood and well-being" is put in a prominent position in the outline of the plan. Among the 20 main indicators, the category of "people's livelihood and well-being" includes 7 items, accounting for more than one third, which is the highest in the previous five-year plans. The indicators cover employment, income, education, medical care, pension, child care, health and other fields.

The "outline of the plan" has included the "urban survey unemployment rate" index and set the target of no more than 5.5% per year. In this regard, Zheshang Securities pointed out that the goal of investigating the unemployment rate is more clear, and the importance of the planned employment goal is greater than that of economic growth.

At the same time, the outline of the plan also includes new indicators such as "the number of practicing (Assistant) doctors per 1000 population" and "the number of infants and young children under the age of 3 per 1000 population".

YueKai Securities pointed out that on the one hand, it reflects the concern for improving the medical level, on the other hand, it also reflects the direction of developing the inclusive care service system, reducing the cost of childbirth, parenting and education, and promoting the long-term balanced development of the population.

In the outline of the plan, the "resources and environment" plate was renamed "green ecology", and some land development and pollutant emission indicators were simplified. YueKai securities and Zheshang securities and other institutions have pointed out that this part of the index setting, more attention to energy conservation and emission reduction and environmental protection.

"Green ecological goals are more focused on 'low carbon', energy conservation, emission reduction and environmental protection are the key points, which coincide with the medium and long-term goals of carbon peaking and carbon neutralization." Zhejiang Securities said.

"Safety and security" is a new plate set up in the outline of the plan. There are two indicators of "comprehensive grain production capacity" and "comprehensive energy production capacity". The targets of "< 650 million tons" and "< 4.6 billion tons of standard coal" have been set respectively.

In this regard, Huatai Securities pointed out that the goal of "less than 650 million tons of comprehensive grain production capacity" is the embodiment of bottom line thinking, with the focus on disaster prevention and control and stable production; while China's energy output will only reach 3.97 billion tons of standard coal in 2019, and the target of "less than 4.6 billion tons" in 2025 will need an average annual compound growth rate of more than 3% from 2020 to 2025, which is still higher than the growth rate in the past five years At present, China's oil and gas resources are too exposed to the outside world.

Hot discussion on investment opportunities

In addition to proposing 20 new goals for economic and social development during the period of the 14th five year plan, the outline of the plan also points out the strategic tasks and measures in tens of chapters and tens of thousands of words. At the same time, it specially sets out chapters to guarantee the implementation of the plan.

So, what industry directions are pointed out in the outline of the plan? How should the investment strategy be arranged around the outline of the plan? In recent days, a number of institutions have interpreted the above issues.

"The 13th five year plan focuses on the main line of supply side structural reform, while the 14th five year plan focuses on the domestic and international dual cycle high-quality development layout." Wu Yue, deputy director of Research Department of Harvest Fund and manager of consumption fund, said in an interview with 21st century economic report that the grasp of investment opportunities needs to be combined with the rhythm of industrial cycle.

"In the 14th Five Year Plan period, in addition to the high-tech fields represented by fully anticipated semiconductors, more attention should be paid to strategic emerging industries, new infrastructure, new energy green industries and digital development, such as food security, industrial component security, energy security and other subdivision competitions. On the whole, hard technology and large consumption will remain the main theme of future investment. Carbon neutralization and carbon peak will bring new opportunities such as energy structure adjustment. " Wu Yue said.

The 12 research teams of Everbright Securities have jointly interpreted the investment opportunities related to the planning outline. It put forward four core concerns: "innovation as the first task, how to fight the core technology battle? How can internal circulation break through the blocking point when domestic demand rises to the "strategic basis point"? How can 5g enable China to increase the proportion of digital economy in GDP? During the "14th five year plan" period, how to achieve the goal of carbon peak orderly

In this regard, Everbright Securities environmental protection power new team pointed out that the ecological environment emphasizes quality constraints, and carbon emission reduction is in an important position. With the target of 20% of non fossil energy in 2025 clear, photovoltaic and wind power are still important reliance. Compared with the 13th five year plan, the installed capacity of new energy with photovoltaic and wind power as the core will be further improved rapidly.

The automobile team of Everbright Securities pointed out that new energy vehicles are strategic emerging industries, and the third round of zhugela cycle of the industry will start in 2022 with electric vehicles as the carrier of intelligent networking technology. It is suggested to pay attention to the individual stocks with positive electric transformation and strong model cycle in passenger cars, as well as the parts leader with global supply R & D capability and smart high-quality electric circuit.

The computer team of Everbright Securities pointed out that from the perspective of key industries of digital economy planned and designed in the 14th five year plan, artificial intelligence, cloud computing and industrial Internet are expected to maintain rapid growth in the next five years. In the next five years, we need to break through key digital technologies and key application scenarios. Key digital technologies focus on high-end chips, operating systems, key algorithms of artificial intelligence, sensors and other key fields.

China Merchants Securities interprets the "14th five year plan" and its impact on a shares from the perspective of industrial trends. He pointed out that according to the "14th five year plan", the industry trends worthy of attention in the next five years mainly involve science and technology, consumption, medicine, manufacturing and energy.

For example, in the field of consumption, China Merchants Securities pointed out that it should pay attention to the personalized and quality of consumption; pay attention to the rise of high-end brands in the fields of daily chemicals, clothing and consumer electronics; pay attention to the construction of cold chain logistics supporting consumption; and pay attention to cross-border e-commerce related to external circulation.

In this regard, Wu Yue said that under the guidance of the "double cycle", the consumer industry may present new characteristics and investment opportunities during the "14th five year plan".

"Consumption upgrading will still be the main investment line of the consumer sector. From the perspective of large asset structure, education, health care, pension, entertainment and other consumer services related to residents' cultural life will usher in faster development. Together with traditional commodity consumption, we will build a more complete and solid consumer ecological scene of "clothing, food, housing, transportation, recreation and education." Wu Yue said.

CSCI has also organized six research teams to jointly interpret the investment opportunities in the planning outline.

Li Taoyang, chief analyst of China Securities construction investment in military industry and new materials, believes that the current military industry is standing at the inflection point of supply and demand and the starting point of growth, and is expected to become a large industry during the "14th five year plan" period.

"In terms of the inflection point of supply and demand, it is recommended to focus on the whole machine and core supporting companies that meet the three major standards of" strong actual demand, large number of reserve models, and mass production node to ", as well as relevant companies with centralized demand release under the background of actual combat training. In terms of the starting point of growth, it is recommended to focus on the leading companies that meet the three major standards of "large industry space, low localization rate and high conversion efficiency" Li Taoyang said.

Zhu Jin, chief real estate analyst and chief construction analyst of CITIC, pointed out that in the real estate industry, the planning outline mainly emphasizes "stable and healthy development" and "ensuring people's livelihood", which reflects the continuous refinement of the central government's management of the real estate industry and the gradual improvement of its requirements.

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