The four major changes in the second half of the Chinese economy will enter the "financial era"

Recently, Haitong Securities analyst Jiang Chao and other prospects for China's economy in the second half of the year, analysis that China's future or into a new era - the financial era, financial assets will become the main source of future wealth of residents, while predicting the macro trend Four major changes.

The following is all:

In the past 30 years, the wealth accumulation of residents has experienced two eras: the era of deposits and the real estate era, and the future may enter a new era - the financial era, financial assets will become the main source of future wealth appreciation of residents.

The opening of the financial era has short-term factors. The central bank has shifted from 13 years of high interest rate de-leverage to 14 years of low interest rate de-leverage, and the financial market has also switched from 13-year bond-to-debt to double-debt. More importantly, the long-term factor, along with the emergence of China's demographic dividend turning point, means that real estate and deposits will gradually become thinner, and only financial assets will benefit in the long run.

The end of the demographic dividend also means that the labor-driven growth model has ended and industrialization is coming to an end. In the future, we must turn to new growth drivers driven by innovation and reform. The question is, what support is the new drive? The answer is that we must rely on the capital market. In the era of demographic dividends, capital scarcity and high return on capital, high-cost banks have become the main financing tool and the key to industrialization. After the aging of the population, capital surplus and capital return rate have declined, so it is necessary to turn to the lowest cost direct financing. The core difference between Japan and the United States is that the former relies on banks and the latter on capital markets.

Therefore, the development of the capital market is not only to help Chinese residents to allocate wealth, but also to help China's economy allocate resources. Just like the past 30 years of banking and real estate in China's economy and wealth, it must be an effective allocation of resources. Therefore, we believe that the registration system will be implemented, and the bond will definitely break. The future will be good money to expel bad money, big waves and gold. We will meet a different future, but equally exciting!

Resident wealth

The third diversion of household savings

From the point of view of household savings, there have been three diversions in history, the first one was from 1997 to 2000, the second was in 06 and 2007, and the third diverging trend appeared in 13 years. In 14 years, this trend has become more and more obvious. The newly added resident deposits are only 4 trillion yuan, which is lower than the lowest value in the past 6 years. And every time the household savings diversion occurs, there is a bull market for stocks.

Resident wealth growth history

From the perspective of the growth of Chinese residents' wealth, the wealth has increased steadily over the past 10 years, and the annual new wealth is between 20-30 trillion. The total wealth of the residents is now close to 300 trillion.

The 8th and 90s: The Age of Deposit

Looking back at the history of Chinese residents' wealth growth, the wealth growth in the 1980s and 1990s mainly came from bank deposits. At that time, the average annual growth rate of household savings was around 30%, because the deposit interest rate was particularly high, and the long-term stability was around 10%. At that time, the so-called resident financial management was to stop saving money and then deposit the bank. The bank helped the people to take care of the wealth.

After 2000: the real estate era

After 2000, residents' financial management entered the real estate era. First of all, from the perspective of housing prices, the average price of new home sales in the country has increased more than three times in the past 10 years, and some regions have even increased by 10 times, and there is almost no obvious callback, which means buying a house at any time in the past 10 years. It is a wise investment, which means that the real estate in the past 10 years has helped Chinese residents to pay their money.

After 2014: The Financial Age

In summary, the wealth management of Chinese residents in the past 30 years has experienced the era of deposits and real estate, that is, banks and real estate to help everyone manage wealth and value-added assets. But since 14 years, we have found that the wealth of residents from real estate has fallen below 40% for the first time, and financial assets have become the main source of wealth growth for the first time, which means that we may be entering a new era - finance era.

Diversified wealth allocation of residents

In the past, residents went to the bank, usually just to save money, or to find a bank loan to buy a house. But now, when you go to the bank, you can find that the bank is selling everything. In addition to selling deposits, it also sells wealth management, sells insurance, sells trusts, sells funds, etc., and sells them almost. In our 14 years, 17% of residents' new wealth comes from bank wealth management, 16% from deposits, 12% from stocks, and other trusts, funds, insurance, etc. This means that the era of diversified wealth allocation has arrived. Demand for financial assets is rising sharply.

Finance is king, stock debt double cattle

We believe that the double-country debts that began to appear last year are not accidental, but the beginning of the era of financial assets. With the deposits and real estate of the residents' wealth-increasing sources in the past 20 years, they have become thinner, and this means that financial assets will become the main battlefield for residents' wealth appreciation. The demand for financial assets will continue to expand, and the emergence of stocks and debts will continue. It is no accident that stocks and bonds are financial assets and benefit from the financial era. If we talk about the financial era, it means that the prosperity of the financial market will not end in the short term, and the future will continue, but why do residents need to allocate financial assets? We have two reasons.

Residents' financial assets allocation has greatly improved space

First, we compare the distribution of resident wealth on various types of assets. We estimate that the current total assets of Chinese residents are about 300 trillion, of which residents' savings are about 60 trillion, accounting for 20%, while the total value of residential real estate is about 200 trillion, accounting for 70%, while the total amount of financial assets of residents is only 40. About 10,000 yuan, the proportion of financial assets is only about 10%, seriously low, only about 25% of the stock market value of 60 trillion yuan belongs to residents, and the bond market has nothing to do with residents. In the US family wealth allocation, real estate accounted for only about 30%, deposits accounted for about 10%, and various financial assets accounted for nearly 60%. Therefore, from the perspective of volume, the proportion of financial assets allocation of Chinese residents has a great room for improvement. The transfer of household wealth from deposits and real estate to financial assets has just begun.

The return on financial assets is outstanding

Secondly, from the comparison of the return on assets, at present, since the house prices have never fallen, the rental returns rate of cities such as Beijing and Shanghai is only 2%. If the money is placed in the bank, the current one-year deposit benchmark interest rate is 2.25%, but since the deposit is 50%, the actual floating rate is about 30%, so the maximum one year is about 3%. And if we look at the financial market, the current 5-year AA-class corporate bond yield is still above 5%, and many blue-chip PEs are around 20 times, which is the implicit return of 5%. Even if the potential return rate of the stock market or the bond market far exceeds real estate and deposits, financial assets are still the first choice for future residents' wealth allocation.

Big turning point in population structure

China's demographic dividend turning point

In the first part, we propose that Chinese residents' financial management is entering the financial era for two reasons. First, the proportion of financial assets is low, and second, the return on financial assets is relatively high. However, from the past few years, these two points have been established. Why did we start to pay dividends in 14 years? We believe that it is mainly due to two major changes. The first is a long-term change. In 2011, China’s demographic structure showed an inflection point. The total number and proportion of the working-age population aged 15-64 began to decline in 12 years, which has far-reaching interest rates and real estate trends. The impact, which in turn affects the wealth allocation behavior of residents.

Demographic structure and real estate cycle

First of all, the demographic structure and the real estate cycle have important links, because the real estate needs are mainly concentrated in the young people's mouth. With the end of the demographic dividend period, the real estate market of all developed countries has successively turned inflection points. Among them, Japan was the first aging, and the real estate bubble was first shattered. The United States and Europe have entered an aging period around 2010, and there has also been an inflection point in the real estate market.

China's real estate market turning point

From the sales amount of new homes in China, from the 400 billion in 2000 to 8 trillion in 2013, the growth rate is nearly 20 times. From the perspective of the sales area of ​​new houses, from 140 million square meters in 1999 to 1.3 billion square meters in 2013, the growth rate is also close to 10 times. The increase in the number of young people brought about by urbanization and demographic dividend is undoubtedly the biggest driving force. However, as the demographic dividend peaks and China's urbanization rate exceeds 50%, real estate sales will face a historic turning point in the future, and house price increases will also slow down. Real estate is not likely to be the protagonist of China's wealth story in the next 10 years. .

Population ageing: zero interest rate is a long-term trend

Second, as the demographic dividend peaks, interest rates have shown a long-term downward trend. In the 14th of August, we put forward the idea that “zero interest rate is a long-term trend” and have not changed so far. Observing the interest rate trend of the United States in the past 100 years is highly correlated with the growth rate of young people aged 25-44, and has nothing to do with the orientation of the Fed's monetary policy. This shows that from a historical perspective, population structure is the most important factor affecting the trend of interest rates.

Zero interest rate spread globally

Currently, we observe that zero interest rates are spreading globally. The US 10-year bond rate is only 2.4%, close to the lowest point of the past 60 years. Japan’s 10-year government bond rate fell below 0.5%.

US interest rate hike is not smooth

Federal Reserve Chairman Yellen said in May that if the US economy can recover as expected, it is appropriate to raise interest rates at some point this year. Recently, due to the expected increase in interest rate hikes in the United States, the global bond market has been adjusted drastically. However, from the trend of the 10-year US Treasury interest rate in the past three years, it has been hovering between 2% and 3%. Since the financial crisis, the nominal growth rate of US GDP has dropped to about 4% of the historical low point. The actual GDP growth rate is only At around 2%. We observe that each 10-year Treasury bond rate rises to more than 2%, accompanied by a resurgence of economic data. The 10-year Treasury interest rate is the benchmark for all long-term interest rates, and the current extremely low economic growth rate is unbearable. Rising, this also shows that the United States is not a smooth road to zero interest rates.

Factor endowment and relative return

Why are current global interest rates generally low? Since interest rates are the return of capital, and capital is one of the two major factors of production, we can explain from the perspective of factor endowment why the reduction of labor will bring interest rates down. When the labor force is relatively abundant, the labor force is relatively cheap, and the capital is relatively scarce, so the interest rate will be relatively high. When the labor force is scarce, wages will tend to rise, and capital will be relatively surplus, so interest rates will be lower.

Global population growth and forecast

Globally, the population has grown rapidly in the past 50 years, so in an era of abundant labor and scarcity of capital, interest rates are generally higher. Nowadays, with the slowdown of global population growth, it means that the global labor force is gradually scarce. In contrast, the relative surplus of capital, so interest rates also tend to decline. From Japan to the United States and Europe, everyone has experienced the process of slowing population growth, falling interest rates and zero interest rates. Therefore, we believe that as China enters the age of population aging, it will gradually enter the era of zero interest rates in the long run.

Long-term shift in asset allocation after aging

In summary, with the aging of the population, the real estate market has experienced a long-term inflection point, and interest rates have also shown a long-term downward trend, which means that the real estate and deposits of the two major asset allocation entities of Chinese residents will gradually become thinner and the future. The only choice will be financial assets, because both bonds and stocks benefit from a long-term decline in interest rates. But the problem is that the turning point of China's demographic dividend appeared in 2012, and in 2013 there was a big bear market with double debts, indicating that long-term turning points are difficult to explain short-term changes.

Monetary policy big turn

Money shortage shadow, balance treasure is born

Why is the turning point of the stock debt double bulls appearing in 14 years? It is not enough to explain this phenomenon by the long-term turning point of the demographic dividend. It is necessary to understand what major changes have taken place in 13 and 14 years. The most impressive impression left for us in 13 years was the money shortage. At that time, the currency interest rate once exceeded 10%. When the stock market fell to 1849 points, and the bond market interest rate was close to 5%, why don't you buy stocks or buy bonds? What are you buying? 13 years was the year when Yu'e Bao was born. It was almost 500 billion yuan in the night, because Yu'ebao could provide a yield of around 7%, which means that it doesn't matter whether you buy stocks or bonds.

Entity overcapacity, high financial debt ratio

The money shortage appears not because there is no money, but because the central bank intends to raise interest rates. We know that for the Chinese economy, the biggest dilemma embodied at the entity level is overcapacity, while at the financial level, it is reflected in high debt ratios, especially in the corporate sector. How to solve the problem of excessive debt ratio? The prescription for 13 years was to raise interest rates. The central bank once thought that the interest rate would be reduced after the interest rate increase, and the debt ratio would be reduced. But the result is that the debt ratio is getting higher and higher, because the debt financing demand is rigid. This means that high interest rate deleveraging is a failed attempt!

Three measures to de-leverage: low interest rates, high equity, debt reduction

If you return to the basic formula of the debt ratio, you can find that there are no more than three ways to reduce the debt rate: one is to lower interest rates, the other is to increase equity, and the third is debt write-down. Throughout the financial crisis, countries have experienced debt ratios. Excessively high problems are also delevered through the above three methods. For example, the Lehman collapse in the United States and the Greek debt negotiation in Europe are debt write-downs, and various QEs increase interest rates while lowering interest rates. Among them, the US three-round QE has hit a record high in the stock market. The Bank of Japan decided to buy stocks directly in 14 years. The European stock market has performed best in developed markets in 15 years. It is also because the European Central Bank started QE in 15 years, and the implementation of negative interest rates led to the purchase of bonds. Nothing to buy, forcing investors to buy stocks.

The attitude of the central bank's monetary policy has changed dramatically since 14 years

In the past 14 years, the attitude of the central bank has undergone tremendous changes. At the beginning of 14th, the central bank announced that it would cap the currency interest rate through SLF, of which R007 was capped at 7%. Therefore, from the beginning of the 14th year, we firmly determined that the bond market has been turned from bear to bull, because it means that the upside of interest rate has been blocked, interest rate. Only decline can not rise. In hindsight, the interest rate of China's 10-year government bond in January 14th did show a big turning point.

In July 14th, the central bank officially lowered the official repo rate, which means that the central bank officially cut interest rates in the money market. Therefore, institutional investors know that the central bank has started to release water, and the stock market has also turned from bear to cattle since July 14th.

In November 14th, the central bank officially announced that the deposit interest rate will cut interest rates, which means that ordinary people know that the central bank has cut interest rates. The money is not worth the money. It started to frantically move the savings, and the stock market began to accelerate.

Monetary loose space is still large, interest rate marketization cuts interest rates

It can be seen that the four-year stock market and the bull market have a very direct relationship with the central bank's move to loose monetary policy. Therefore, for the short-term capital market trend, the most important thing is to judge how much space the central bank has loose monetary policy. And we judge that the interest rate cut cycle is far from over. At least one interest rate cut in the future can be expected, because according to Zhou Xiaochuan, the central bank governor, the interest rate marketization will be completed in 15 years, and the current deposit interest rate ceiling has reached 50%. We estimate that In June, the deposit interest rate ceiling may be fully liberalized, accompanied by a rate cut to protect the escort.

The interest rate cut cycle is far from over, and the potential interest rate cut space is still more than 3 times.

We judge that there are still 3-4 interest rate cuts in the future, mainly for two reasons. First, the Prime Minister inspected three banks in April and concluded that the loan interest rate is too high, generally above 6%, while the corporate profit rate is only about 5%, of which 100bp, which requires more than four interest rate cuts. Second, the central bank said that the interest rate cut was mainly due to the fact that the real interest rate was too high. At present, the nominal interest rate of loans is about 6.8%, and the price is not 1.5% of the CPI. It also needs to consider -4.5% of the PPI. Therefore, the GDP deflator representing the comprehensive price index is only -1.2%, which means that the actual loan interest rate actually means Up to 8% or more, far exceeding the actual GDP growth rate of 7% in the first quarter, which differs by 100bp, which also corresponds to more than four interest rate cuts. Therefore, after the central bank cut interest rates in April, there are still more potential interest rate cuts in the future.

Stable exchange rate, low interest rate, continuous RRR

For the central bank's loose monetary policy, there are two main risk points in the second half of the year: First, the Fed may start raising interest rates in September, begin normalization of monetary policy, and impact emerging markets. However, in our view, from the analysis of Mundell's triangular framework theory, the current prime minister clearly clarifies that the RMB exchange rate does not depreciate, and also emphasizes that interest rates are not reduced, which means that funds will continue to flow out. At present, China’s foreign exchange reserves are as high as 3.7 trillion US dollars, and the deposit reserve ratio is still at a historical high of 18.5%, which means that the central bank will continue to reduce the funds in the next few years to hedge the outflow of funds, and the benchmark interest rate of loans at historical lows. In comparison, the RRR is also reasonably reduced to less than 10%.

Economic inflation rebounded

Another worry in the current market is that the economy and inflation rebounded in the second half of the year, restricting the relaxation of the central bank's monetary policy. However, due to the current high interest rates on loans, social financing continues to shrink. The growth rate of social welfare is the most important leading indicator of the economy. The leading economic growth is 3-6 months. This means that the short-term economic rebound will occur in the first quarter after the fourth quarter. The rebound of CPI should also be in the fourth quarter. This means that there is no need to worry about tightening monetary policy before this.

Capital market era

Currency discharge is very controversial

In the previous article, we discussed that China is entering the financial era. There are two main logics: one is long-term logic. After the aging population, interest rates have been declining for a long time, the real estate cycle has peaked, and residents' wealth is moving from real estate and deposits to financial assets. The other is short-term logic. The central bank has turned to low interest rate deleveraging policy since 14 years, and monetary easing is conducive to the rise of financial asset prices. But everyone is wary of loose monetary policy, because the 4 trillion stimulus in 2009 finally evolved into nearly 10 trillion credit, and caused the consequences of overcapacity. In 14 years, new credit has exceeded 2009, and 15 years is expected to exceed 10 trillion for the first time. It has once again triggered fears that excessive water release will worsen the economic structure.

From monetary theory to growth theory

It is precisely because of the controversy over the loose monetary policy, so there has been a huge controversy about the current round of the double-crown stocks, and the bubble theory is not lacking. In our view, the study of liquidity belongs to the category of monetary theory, mainly studying short-term phenomena, focusing on interest rate changes and its impact on the relative price of assets. But if you want to understand the long-term value of assets, you must move from monetary theory to growth theory.

Bank financing fosters traditional industrial industries, and demographic dividends end the end of industrialization

In the past: Demographic dividends drive growth. From the perspective of growth theory, China's past main growth drivers came from ample labor, and derived three major inferences: First, there are so many people, so there is ample demand, and some products are bought; secondly, there are so many people, so the wages are cheap, and the products are competitive. Not selling; the last few people are relatively scarce, the return on capital is high, and banks have become the main financing tool.

The key to industrialization: bank credit is life. It can be seen that in the demographic dividend period, due to the relatively high return on capital, high-cost banks can also flourish and become the main financing tools. The key to industrialization lies in the bank's credit support. As long as the bank gives money, the factory can start production. The products are cheap and good to sell, and it is difficult to succeed.

Bank financing: fostering traditional industrial industries. Many of our leading industrial enterprises, such as SAIC and Baosteel, are cultivated by banks providing credit funds. And if we put the perspectives globally, we can find that the leaders of the traditional industrial industry are basically born in the era of indirect financing. At present, Toyota in Japan is still the leader of the global automotive industry. It is affiliated with the Mitsui Foundation of Japan, and its development is inextricably linked with Japan's main banking system.

The end of the demographic dividend: the end of industrialization. However, with the end of China’s demographic dividend, China’s industrialization is also coming to an end. From the just-released industrial economic data for April, from the downstream cars to the middle and upper reaches of steel, cement, and power generation, almost all of them have fallen into negative growth. This means that the credit-driven industrialization model has come to an end.

Growth Motivation: From Demographic Bonus to Reform and Innovation

From the perspective of growth theory, the overall negative increase in industrial products in April is not an accidental phenomenon, but an inevitable result after the end of the demographic dividend. This also means that for the Chinese economy, we must look for new growth drivers. We believe that there are three main hopes: the human capital that represents college students and engineers, the innovation of the American model, and the new growth drivers such as the reforms promoted by Xi.

The GEM represents the "Chinese Dream" and the capital market fosters emerging industries.

GEM and "Chinese Dream." From the performance of this round of stock market, the GEM index has risen more than five times since 12 years, far exceeding the one-fold increase of the main board market. An important explanation should be that China's economic growth momentum has changed, from demographic dividend to innovation. Driven by reforms, and as the name suggests, companies on the GEM are more innovative and entrepreneurial companies, representing the future growth drivers and representing the Chinese dream.

Capital Market: Cultivate emerging industries. How do dreams come true? In the field of innovative companies, the United States is the leader. We have found that all innovative companies in the United States are nurtured by capital markets. Everyone has heard about the garage story, including Google [microblogging], Apple, Amazon [microblogging] are born in the garage, in fact, through the PE, capital market to cultivate these famous enterprises. China's Tencent, Baidu [microblogging], Ali, etc. are all fostered through the PE and capital market models.

Both Japan and the United States have fallen in interest rates, and the stock market is a world apart. Since the 1980s, interest rates have also been decreasing. The US Dow has risen from 1,000 to 18,000, while Japan’s Nikkei has fallen from nearly 40,000 to 18,000. The United States represents a successful model, while Japan represents a failure model. The core difference is that there is an essential difference in the financing structure!

Japanese and American financing structure differences. Comparing the financing structure of the United States and Japan, it can be found that the United States has always been based on direct financing, and the proportion of direct financing has remained above 80%. Japan has been focusing on indirect financing until 2000, until the direct financing ratio in recent years. More than indirect financing.

From bank financing to capital markets; direct financing costs are low

From bank financing to capital markets. Why an enterprise in the future depends on the capital market to cultivate, an important reason is that as the population ages, the return on capital will tend to decline for a long time, so it must shift from high-cost bank financing to low-cost direct financing. Because the bank is characterized by many outlets and many employees, the cost is naturally high, and the direct financing is characterized by information sharing, so it can greatly reduce the financing cost and is suitable for the era of low return on capital.

Direct financing costs are low. We compared the costs of direct and indirect financing in China and found that direct financing costs are much lower than indirect financing. According to data released by the central bank, the average interest rate of bank general loans in the first quarter of 2015 was as high as 6.78%, and most of the loan interest rates were above 6%, and some of the loan interest rates were even above 10%. Part of the reason for the high loan interest rate was the bank. The cost of capital is high, and the total capital cost rate of ICBC in 14 years is as high as 3.41%. In contrast, direct financing, equity financing is almost equal to zero cost, and bond financing is far lower than loans. The current 5-year AA-class corporate bond interest rate is only 5.3%, far lower than the loan benchmark interest rate of 5.95% of the same period. The recently issued 5-year AA+ corporate bond Zhoushan Port debt rate is only 4.48%.

Let go of financing to break the gold, win the inferior big wave

Direct financing is lagging behind, stemming from excessive regulation. From the current new financing structure in China, the proportion of credit financing still exceeds 60%, while the proportion of trusts and entrusted funds related to banks also exceeds 20%, and stock and bond financing accounts for less than 20%. This means that the development of direct financing is huge.

The main bottleneck in the development of the bond market and the stock market is over-regulation. Before the IPO of the stock market had a clause that the loss-making enterprises could not go public, a large number of enterprises could not go public. In the bond market, the scale of public debt issuance cannot exceed 40% of the net assets, and many enterprises are also blocked from issuing bonds.

Open up equity financing and lay the foundation for innovation. Thanks to the revision of the securities law, many controls on the capital market are being fully liberalized. In the past, due to the heavy control of China's stock market, listing became a privilege, and many powerful capitals were born. And we believe that under the concept of the new government's common prosperity, deregulation is the general trend, especially the liberalization of the registration system, which means that everyone's companies have the opportunity to get rich, and will inject a continuous stream of innovation into the Chinese economy.

Establish a firewall to break the bond just against. In order for the capital market to effectively guide the allocation of funds, in addition to liberalizing equity financing, another point is that the rigid redemption of debt must be broken. Regardless of the current Europe or the past Japan, due to the delay in the redemption, the continuous mismatch of resources has been caused. The deposit insurance system was officially established in May, which means that the establishment of a firewall will help prevent risk contagion, help break the gap, and truly reduce risk-free interest rates.

Survival of the fittest, big waves and gold. In the past one year or so, as the wealth of residents has turned to the capital market, it has promoted the emergence of stocks and debts. No matter which type of financial assets are bought, it has a bumper harvest. However, with the implementation of the stock market registration system and the breaking of bonds, it means the emergence of differentiation, real and fake, good and bad, and its pricing will be very different, which means good The mechanism of the currency expelling bad money and the survival of the fittest is expected to emerge, thus promoting the effective allocation of financial resources.

The rise of industrial transformation service industry, the trend of wealth transfer

Industrial transformation, the rise of the service industry. As the return on capital declines, on the one hand, the financing system will shift from banks to capital markets. At the same time, due to rising labor costs, industrial competitiveness will decline, and demand for services will increase, and the economic structure will shift from industry to services. The traditional industry has only three outlets. One is to go out and find new demands abroad through the Belt and Road. The second is high-end manufacturing to improve competitiveness. The last one is to become the industry leader through the integration of mergers and acquisitions.

Tourism consumption: The outbound travel is strong. And we believe that the service industry will be the main theme of the future economy. With the increase in the income of Chinese residents, although the demand for residents in clothing, food, housing and other areas tends to be saturated, the demand for services such as travel, education, medical care and culture is increasing. Traffic consumption is different from the other three types of consumption in the “clothing, food, housing and transportation” because of its leisure attributes. The most typical one is the rapid growth of the number of outbound tourism. In the past five years, the growth rate of outbound tourists of domestic residents has remained at around 20%, which has quadrupled.

Educational consumption: It is difficult for private primary schools to enter school. Among the various emerging consumption of urban residents, the second highest proportion is education, culture and entertainment. In the fixed assets investment of the education industry at the end of 14 years, the proportion of private investment is still less than 30%. The supply of high-quality private education resources is in short supply, which is reflected in the following three aspects: First, the quality of private teachers is scarce, and the ratio of students to teachers in private schools rises; The choice of school rights has led to a surge in the price of school districts; the third is the difficulty in entering high-quality private primary schools.

Cultural consumption: The box office of the movie continues to grow. The film is called the “seventh art” and is also an important component of cultural and entertainment consumption. Its particularity is that it can be repeated. In the past 13 years, the box office revenue of Chinese movies has continued to grow. The box office revenue of the 14-year Spring Festival Golden Week exceeded 1 billion yuan, and the box office receipts of the 15th Spring Festival Golden Week reached a record high of 1.5 billion yuan.

Sports consumption: market growth drives the box office. In the major professional sports leagues, the Super League is the representative. In the 08-12 season, the ticket sales of the Super League did not exceed 110 million yuan. In 2008, the company's revenue was only 168 million yuan. In 2009, it was reduced to 130 million yuan due to anti-gambling. With the advancement of anti-corruption and the increase in the participation of private capital, the level of marketization of football has been continuously improved, the confidence of sponsors has warmed up, and various clubs have increased their capital investment to introduce reinforcements. The popularity of the Super League has been greatly improved, which has led to an improvement in income. In the past 14 years, the company’s revenue has reached 440 million yuan, a record high.

Medical consumption: demand for a vast blue ocean. The sharp increase in per capita income and the aging of the population mean that there is huge room for Chinese residents to consume medicines. In 2008-13, China's pharmaceutical sales increased by an average of 20% annually, and the growth rate was maintained at over 15%. In the past 10 years, the sales revenue of China's pharmaceutical industry has continued to grow at a high rate, and the growth rate has remained above 20%.

Reform of state-owned enterprises: the monopoly of service industries is liberalized. And we believe that the service industry will be the main theme of the future economy. As the income of Chinese residents has increased, although the demand for residents in food, clothing, housing and transportation has become saturated, the demand for services such as education, medical care and culture has been increasing. We have observed that almost all service industries are monopolized by state-owned enterprises, so the reform of state-owned enterprises An important point of view is the timely liberalization of the service industry. In 14 years, the super-box office hit a record high, the Chinese movie box office created a global champion in February 2015, and the education supply in the first-tier city school district surged, reflecting the demand for services, and the core is to break the monopoly and increase the effective supply.

Different future, equally exciting

In summary, with the emergence of the population structure turning point, industrialization will come to an end, and the service industry will rise, the economy as a whole may continue to decline, but at the same time interest rates will continue to decline, and residents' wealth will shift from physical assets to financial assets. Will meet a different future, but equally exciting!

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