China to upgrade industrial policy

The 13FYP of China may include a slew of policies to upgrade the manufacturing sector. In May 2015, the State Council unveiled a national plan, "Made in China 2025", which aims to move the manufacturing up the value chain and transform China from a manufacturing giant into a leading manufacturing power. 

Specifically, China has prioritised nine tasks in the plan, including improving manufacturing innovation, integrating information technology industry, strengthening the industrial base, enforcing green manufacturing, promoting manufacturing-related service industries, and exporting excessive capacities.

"Overall, a number of key sectors will likely benefit from the plan, including IT, numerically controlled machine tools and robotics, aerospace equipment, ocean engineering equipment and high-end vessels, high-end rail transportation equipment, energy saving and new energy vehicles, electrical equipment, new materials, bio-medicine and high-end medical equipment, and agricultural machinery. We also expect the government to promote innovation and encourage entrepreneurship by increasing public spending on R&D and the provision of funding support to SMEs. Figure 9 shows that high-tech exports have been outperforming despite an overall sluggish external demand", says Barclays.

A related area in the 13FYP will be the overseas investment strategy. China's 'going global' strategy encourages domestic enterprises to invest abroad, and outward direct investment (ODI) has risen sharply, exceeding USD120bn in 2014. Thus far, China's ODI has been dominated by energy-related investments such as oil and gas and mining.