In 2010， China reached the goals concern- ing its economic development set in “the eleventh five-year plan” which was compiled fi ve years ago， and also witnessed its economic aggregate skyrocket to be the second largest in the world. T e year of 2011 marks the beginning of “the twelfth five-year plan”. For investors， it is crucial to fi gure out how to adjust their investment scheme within the framework of this new fi ve-year plan. So， what are the investment hotspots during “the twelfth fi ve-year plan”?Macro-consumption: an inevitable rise under \"restructuring\"The rise of consumption depends on the restructuring of the national economy. In the past， the net exportation and investment were the main impetus to economic growth. However， the economic pulling eff ect from the consumption plays a bigger and bigger role. T e section of macro-consumption includes pharmacy， retailing products， clothing， food， drink， etc.， which， more broadly speaking， embraces all aspects of domestic demand.It is estimated that， in the twelfth fiveyear plan， when GDP grows by about 7%， the final consumption rate will rise from 48.6% in 2010 to 55% in 2015. T e goal in the long run is to make it reach 65% in 2020. To realize this， the government should make two decisions: one is to adjust the system of income distribution (including adjusting diff erent relations in income distribution， reforming income distribution mechanism， enlarging the coverage of social security， promoting public services， etc.); the other is to accelerate urbanization， of which the most important thing is the citizenization of migrant workers. Helping a population of 0.2 billion to settle down， be employed and be insured will generate enormous new demand， which requires the strengthening of the accommodating capacity of medium and small cities and small towns.Hotspot Two:High-speed railway and construction of urban rail: crucial impetus to economyOf the transportation infrastructure， highways， ports， airports and so on have been relatively well constructed. T us， the construction of railway will become the highlight， owing to the construction of high-speed railway， urban rail and inter-city express passages， of “the twelfth fi ve-year plan”.According to the national planning on railway network in the middle and long run， till 2020， there should have been constructed 120，000 kilometers railway in operating millage， compared to the present 80，000 kilometers.It is estimated that more than 3，000 billion yuan will be invested in the railway construction during “the twelfth five-year plan”. This， together with other relevant investment thus brought about， will be the essential prop for economic growth in this fi veyear plan.Hotspot Three:Manufacturing services: signifi cant strategy for industrial transformation and upgradingChina’s imbalanced industrial structure is mostly attributed to the underdevelopment of the tertiary industry which is supposed to serve the industry and agriculture. This， to a large extent， restricts the expansion of domestic consumption market and the increase of added value of exported products， with the result that domestic enterprises have to revolve around products at the lower end of the value chain to carry out their production and operation. T us， the optimization and upgrading of China’s industrial structure is hindered. Considering the present stage China’s economic development have arrived at， China should get the manufacturing service industry fi rmly planted in its second stage， and gradually lead the service industry to its third stage， shifting its auxiliary and supporting role for the manufacturing industry to a strategic guiding one.Hotspot Four:Strategic emerging industries: seven promising onesOn September 8， 2010， the State Council reviewed and basically approved The State Council’s Decision about Speeding up the Cultivation and Development of Strategic Emerg- ing Industries. The Decision defines the key directions， main goals and supporting policies for these strategic emerging industries. Judging from the actual situation in China， science and technology， and the industrial foundations， they are confi ned to the following seven industries: energy-saving and environment-friendly industry， newgeneration information technology， high-end equipment manufacturing， new energy， new materials， and automobile driven by new energy. Their development will be accelerated with concentrated eff orts.Investment in the new green industries should be encouraged with an aim to reducing energy consumption and carbon emission. Xu Huaqing from the Research Center of Energy， Environment and Climate Change under National Development and Reform Commission points out that， during “the twelfth fi ve-year plan”， the energy consumption per unit of GDP will reach an index of 18%. T e goal of cutting emission for “the twelfth fi veyear plan”， which is to make the energy consumed per unit of GDP fall by less than 20%， is lower than that set for “the eleventh fi ve-year plan”. It is estimated that in the decade to come， the annual growth rate of GDP will gradually decline till it lingers at 8% or below， rendering the energy saving and emission reduction more diffi cult.Someone also predicts that， during “the twelfth five-year plan”， the government will put forward not only a goal in reducing energy consumption， but a goal in reducing emission of carbon dioxide as well.LinksInvest in commerce and trade industryOn the basis of “expanding the domestic consumption” and “enabling the lowerincome classes to consume more” stated in“the twelfth fi ve-year plan”， Hongyuan Securities are of the following opinions:● During the twelfth fi ve-year plan， the sales of necessities， like food， drink， clothing and other products for daily use， and elementary optional consumer products， like cosmetics， will grow faster at a annual compound growth rate， which we predict to be more than 25%， exceeding that of “the eleventh fi ve-year plan”. At the same time， we think highly of supermarkets and chain stores of household appliance which are settled in the middle or west regions， with penetrating network in the whole market.● Multi-region economic development brings about increase in income per capita. Sales in department stores are more resilient than those in supermarkets. We are confident in leading department-store enterprises in regions with a robust development momentum and enterprises that are able to expand and consolidate themselves， and enjoy sinking distribution channels and industrial upgrading when the entire business landscape is favorable.● Investors can choose to invest in brand optional consumer goods， especially enterprises that are in control of the end of the network， and can be easily expanded by way of copying.
