Source: official account lixunlei0722 of Wechat
In April last year, the Sino-Thai clock scoring system revealed that the large consumer segment of the A-share market scored the highest. Looking back over the past year, industries closely related to consumption, including food and beverage, biomedicine, culture and entertainment, commerce and retail, have developed rapidly, and the contribution of consumption to GDP has reached a new high in recent years. For example, final consumption accounted for 58.8% of economic growth in 2017. As far as the secondary market is concerned, the "drinking and taking medicine" sector also saw a considerable increase in 2017. In my opinion, China's economic transformation will inevitably lead to a sustained upgrading of consumption, so we are still optimistic about big consumption in 2018.
At the macro level, we are optimistic about the three logics of large consumption.
The first logic is that China's economic growth is highly dependent on investment. With the deepening of economic transformation, the decline in investment growth will be a long-term trend. In 2017, the nominal growth rate of China's fixed asset investment dropped to 7.2%, which is lower than the nominal growth rate of GDP and the total retail sales of consumer goods. Ten years ago, fixed asset investment grew by 24%, much faster than GDP.
The report of the 19th CPC National Congress pointed out that China's economy has moved from the pursuit of high growth to the pursuit of high quality. since November last year, the Ministry of Finance, the State-owned assets Supervision and Administration Commission and the National Development and Reform Commission have successively issued regulatory opinions on standardizing PPP projects, and financial institutions have become increasingly cautious about PPP. Recently, some banks have suspended financing for PPP projects. In addition, in the case of rising financing costs, the growth rate of real estate investment will also decline. Therefore, it is estimated that the growth rate of investment will decline this year, especially in infrastructure investment.
2017Net exports contributed 0.6 percentage points to the 6.9% annual GDP growth rate.In the context of the slowing pace of economic recovery in Europe and the United States and the appreciation of the RMB, it is estimated that export growth will slow in 2018 and its contribution to GDP growth will also decrease. In this context, China's economy will become more dependent on consumption, and a series of policies to encourage consumption may be introduced in 2018 to prevent the economy from falling too sharply.
The second logic is that in the process of economic transformation, it is an inevitable trend for the proportion of the tertiary industry to rise. The added value of the tertiary industry accounted for 51.6% of GDP in 2017 and will continue to rise in 2018. In addition, among the added value of the tertiary industry, the share of the financial services industry and the real estate industry declined significantly in 2017, with a growth rate of only 4.5% and 5.6% respectively, both lower than the 8% growth rate of the tertiary industry.
The decline in the share of finance and real estate reflects the remarkable results of measures to extricate China's economy from emptiness to reality, that is, the problem of idling funds in the financial sector will be improved, and M2 growth will slow to 8.2% at the end of 2017, which means a decline in the scale of off-balance sheet business. If the intensity of financial regulation is not reduced in 2018, there will still be funds to withdraw from the financial sector, which may be beneficial to boost consumption.
The third logic is that demographic changes will lead to a rise in consumption and a decline in "savings". China has one of the highest household savings rates in the world. After 2010, China's national savings rate peaked and fell, which may be related to the decline in the proportion of China's working-age population. Demographic changes will be reflected in promoting consumption in two aspectsOn the one hand, with the continuous improvement of the aging population, the household savings rate will slowly decline, and the consumption rate will rise accordingly, similar to the Japanese model.
On the other hand, the income of Chinese residents is divided by age, and the highest income should be the post-60-70 group.As they enter the later stage of their career, their consumption in health care, old-age care, leisure and entertainment is bound to increase; and for the post-80s-90s with relatively low income, they are more able to accept the advanced consumption concept of modern people, that is, credit consumption.According to statistics, the leverage ratio of residents has about doubled in the past 10 years. Consumer loan ABS and credit card loan ABS issued 83.7 billion yuan and 65.3 billion yuan respectively in 2017, an increase of 12.86 times and 3.66 times respectively compared with the same period last year.
In short, the above three logics that are optimistic about large consumption are all related to each other, reflecting that after the per capita income of residents has reached above the middle level, under the background of the rising proportion of the service industry and the deepening of population aging, the economic transformation will continue to escalate, and the consumption-led economic growth model has begun to emerge. Although the current dependence of China's economy on investment is still much higher than the global averageHowever, from the perspective of asset allocation, we should focus on the future of consumption-led economy.
Where is the Hot spot of consumption: revealing the facts with Macro data
Many people are optimistic about China's consumption and consumption upgrading.It is only based on the logic that per capita GDP reaches 8000 US dollars. In fact, there are three major misunderstandings in this logic.First, the per capita GDP level expressed in terms of the present value of US dollars is incomparable to the per capita GDP level of developed countries in the historical stage of consumption appreciation; second, there is a great difference in purchasing power parity between China and developed countries; third, the proportion of total disposable income of Chinese residents in GDP is far lower than that of developed economies.
My research found thatThere is a significant correlation between the growth rate of consumption and the growth of residents' income, especially with the median growth rate of residents' disposable income.For example, the per capita disposable income of residents increased by 9% in 2017, significantly higher than that of 8.4% in 2016.The median fell to 7.3% from 8.3% in 2016.
Source: national Bureau of Statistics
Correspondingly,In 2017, the per capita nominal consumer expenditure of urban residents was 24445 yuan, an increase of only 5.9 percent, while the growth rate in 2016 was 7.9 percent, a decrease of two percentage points.Similarly, total retail sales of consumer goods in 2017 increased by 10.2% over the previous year, down 0.2 percentage points from the previous year.
Why is the growth rate of consumer spending much lower than the growth rate of income? The problem lies in the difference between the median and the average, that is, the income growth rate of high-income groups is higher than that of low-and middle-income groups. Due toHigh-income groups have lower marginal propensity to consume.，But it accounts for a high proportion of the total income of residents.Therefore, their income increases the average income of residents, but contributes little to consumption.
So why do high-income groups "the rich get richer"? This should be related to the rise in house prices in 2017, becauseMore than 60% of the assets of domestic households are allocated to real estate.Last year, the rate of return on equity assets or financial products was a drag on the growth of residents' property income. Data from the National Bureau of Statistics show thatLast year, the per capita net income of residents across the country was 2107 yuan, an increase of 11.6 percent.
The continuous rise of house prices since 2015 is the main reason for the rise of Gini coefficient in China.. Therefore, only from the change of residents' income structure, high-end consumption is promising, because it is related to the high income growth rate of high-income groups, that is, there is a significant positive correlation between Gini coefficient and high-end consumption growth.
Source: Wind, China-Thailand Securities Research Institute
According to data released by the China Association of Automobile Manufacturers, a total of 24.72 million passenger cars were sold in 2017, an increase of only 1.4 percent over the same period last year, a sharp drop of 13.5 percent from the previous year. However, domestic luxury car sales have grown by more than 20%. Similarly, the growth rate of urban residents' food, tobacco and alcohol consumption was only 3.5% in 2017, but someSales of high-end spirits and beer have grown by more than 20%.
2017The import quantity of the top ten automobile brands before the year
Data source: Yang Changpu, China-Thailand Securities Research Institute, Federation of passengers.
In the consumption data in 2017, the consumption expenditure on housing, education, culture, entertainment and health care is 9.6%, 8.9% and 11% respectively, which means that the consumption of services is more bullish. It benefits from the upgrading of consumption brought about by the increase in residents' income level and the aging of the population.In particular, the consumption of health care is more promising. Judging from the increase in the stock index of 39 industries in the secondary stock market over the past decade, the pharmaceutical and biological industry ranks first in cumulative growth.
2018The Prospect of Annual consumption-- the Policy of encouraging consumption can be expected
Looking back at the characteristics of China's economy in the past two years, it is not difficult to findChina's steady economic growth in 2016 depends on investment, and the bright spot of consumption is passenger cars.(policy of halving purchase tax for 1.5 litres of emissions)China's steady economic growth in 2017 depends on exports (excluding net exports, GDP growth is only 6.3%). The bright spot of consumption is housing-related consumption., such as furniture, home appliances, home decoration and so on. So, these dependencies and bright spots seem to flinch in 2018, such as investment growth will continue to slow down and exports will not be better than in 2017. As China's economy enters an era dominated by stock, the growth rate of consumption related to cars and housing is bound to decline.
Based on the above judgmentChina's economy will be more dependent on consumption in 2018. If the growth rate of housing and car consumption slows down, policy stimulus will be needed to increase the total consumption.. As mentioned earlier, there is a strong correlation between consumption and the growth rate of disposable income of residents, especially the income growth of low-and middle-income groups. In the past two years, the income of high-income groups has grown faster than average, soHow to improve the income growth of low-and middle-income groups should be considered in 2018.
Although the eradication of poverty is the policy focus in the next three years, the proportion of people living in poverty is already very low, and even if the goal of comprehensive poverty alleviation is achieved, the positive effect on consumption is still relatively limited.However, low-and middle-income groups account for more than 70% of China's total population, which is the main force of consumption.
However, raising the income level of low-and middle-income groups and narrowing the income gap is a long-standing problem, which can only be partially improved from the aspects of tax preference and social security increase. As private enterprises account for more than 80% of employment, but the growth rate of private investment has declined significantly in recent years, which is obviously disadvantageous to improving the income level of low-and middle-income groups.The actual growth rate of private investment in 2017 is only 4.5%. Therefore, it is particularly necessary to take more effective measures to prevent private investment from falling too fast.
Source: WIND, courtesy of Wang Shijin, China-Thailand Securities Research Institute
A series of policies to encourage consumption should be introduced in 2018, especially in areas where public consumption is growing rapidly, such as reducing consumption tax.
It is expected that the overall increase in house prices across the country should decrease in 2018, and the sales of commercial housing should also decline, which means that the growth rate of residents' property income will slow down, that is to say, the income growth rate of high-income groups will slow down. Based on this, it is estimated that the growth rate of high-end consumption will slow in 2018. For the capital market, in terms of the allocation of consumer assetsShould we be more inclined to the equity assets of mass consumption?
In addition, the growth rate of service consumption is bound to far exceed that of physical consumption, which is also a typical feature of consumption upgrading. For example, in 2017, the total box office of films nationwide increased by more than 13 percent over the previous year, and the total revenue of tourism exceeded 5.3 trillion yuan. Because the price increase of service consumption also far exceeds the price increase of means of livelihood.It is estimated that the price of services will rise further in 2018, which has become the logic of increasing the allocation of consumer assets of services.
Compare consumption data for 2016 and 2017It is found that the growth rate of sales of few consumer goods is lower than that of consumption.This is not entirely a factor in the rise in the price of consumer goods, because the phenomenon of overcapacity in the means of livelihood industry is more obvious, but may be related to the upgrading of consumption.
Production enterprises that have the ability to upgrade consumer goods while maintaining undiminished sales are mostly enterprises with high market share or leading enterprises in the industry.Under the guidance of stock economy, the growth space of consumer goods sales will be more and more limited, and many enterprises in the industry will certainly appear differentiation.The strong are always strong, and the survival of the fittest. Therefore, compared with 10 years ago, the phenomenon of all prosperity has become a thing of the past, and the differentiation of the industry will be more intense.When allocating assets, choosing an industry leader is more likely to get a premium.。