In line with a broader acceleration of reform plans, signs are emerging that the government is taking more concrete steps to tackle pollution. As the government ramps up its campaign several companies involved with air pollution reduction have seen their share price rise (Renminbi Compass May 15, Spotlight). We believe that steel prices could also benefit from these developments, as the sector is a good candidate for stricter emission standards and the closing of out-dated capacity. Previous obstacles to reform - the fact that construction steel manufactured by backward, heavily polluting mills was in short supply and that vast swathes of the industry were unregulated - have diminished, potentially paving the way for a clampdown on the worse polluters.
Infrastructure
China’s fight against pollution heats up
The new set of policy priorities for Xi Jinping’s administration, increasing public discontent, and the diminishing importance of the industrial sector to China’s economy, makes us cautiously optimistic that the drive to tackle pollution could gain momentum this year.
China takes aim at polluting industries
China’s Ministry of Environmental Protection is poised to cap emissions in polluting industries as Beijing ramps up its policy response to public discontent over choking smog. We believe that further policies are likely to be introduced in the near-term, as these measures dovetail with other key policy aims of Xi Jinping’s new administration.
Pollution prompts stricter fuel standards
The Chinese government has heeded calls for more rigorous fuel standards in order to help combat China’s chronic air pollution.
Fixed-asset investment to return to strength in 2013
Capital intensive China has struggled this year, but we believe that it will fare better in 2013
Long road home
China has a long way to go in terms of housing and infrastructure provision, suggesting that investment still has an important part to play in the economy.
Income squeeze casts doubt on local investment plans
Despite unveiling ambitious Rmb17tn investment plans in recent months, a shortfall in income from land sales and bank loans means that local governments lack the funding to support another 2009-style jump in local investments.
Time to act
It is clearly time for China’s policymakers to act to avert what has until now been a gentle slowdown from turning into a slump. In our view, Beijing has options but time is short
Water price increases could open investment floodgates
Chinese authorities appear willing to raise water prices, a move which has the potential to attract much-needed private investment into water distribution, wastewater treatment and water conservation projects.
Property inventory build-up pressures Beijing
In many cities, unsold real estate inventory is fast piling up, pressuring Beijing to soften the impact of its home purchase restrictions.
Latest report
16 May 2013
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RENMINBI COMPASS
Renminbi Compass reflects key changes in the renminbi-denominated investment environment.
Providing research coverage on asset classes as diverse as chengtou bonds, dim sum bonds, real estate, trust products, underground banking, art and antiques, as well as its traditional equity fund research.
Renminbi Compass provides orientation for investors navigating the expanding universe of renminbi asset classes.
