Investment key to stable growth(2)

Therefore, it is not surprising that investment in public products is highlighted in the Government Work Report.

This is clearly a confirmation that the seven packages of investment projects listed late last year by the National Development and Reform Commission will be the key areas of government support this year. These areas are information, power grid, oil and gas networks; clean energy; oil, gas and mineral resources supply; food and irrigation; transportation; ecology and environmental protection; and healthcare and elderly care.

Other than these public-product industries, another industry that is likely to receive government support is real estate. The Government Work Report delivered some key messages related to the property industry.

Curbing speculative activities is no longer included in this year's report, suggesting an overall policy relaxation for the industry. "Property market controls" are now a thing of the past. What replaces them is the expression of "stabilizing housing consumption". Clearly, the industry's role in bolstering economic growth, especially amid fears of steeper slowdown, has been recognized by top policymakers.

Local governments are expected to have a bigger say in local property markets, as the report stresses "local conditions" must be considered in rolling out policies in different regions. This means that some areas, where property markets are not performing well, are now allowed to roll out even more aggressive policies to bolster markets. By comparison, big cities such as Beijing and Shanghai may apply milder supporting measures and retain their home-purchase restrictions as property prices there are still stable.

In addition, the affordable housing sector and reconstruction of areas with sub-standard housing will continue to be areas attracting government investment and supports.

Generally speaking, the property market is likely to offer more investment opportunities, although the profit margin of the industry will not be as big as it was a few years ago. The private sector is expected to be more than welcome in making investments this year, with the government at all levels promoting the practice of public-private partnership.

Investment is seen as the savior of the economy, but making investment needs a lot of money. Although the budget deficit is set at 1.62 trillion yuan ($260 billion) for 2015, an increase of 270 billion yuan from a year ago, to ensure the government has enough money to invest, the government itself cannot meet the demand for all investments.

The model of public-private partnership is preferred by the government to leverage the financial strength of the private sector. Central government departments such as the National Development and Reform Commission and the Ministry of Finance are eyeing supportive measures for this kind of model.

Local governments, such as Jiangxi and Shandong provinces and the Guangxi Zhuang autonomous region, all rolled out projects that look for partners under the public-private partnership model. Although these projects are often public welfare projects with low profit margins, their stable profitability and government guarantee can offer private investors a good opportunity.

Similarly, private investors may also find opportunities in the advanced reforms of State-owned companies as the Government Work Report calls for mixed-ownership reforms.

But private companies must be mindful of risks in both the public-private partnership model and mixed-ownership reforms. As both endeavors are new things without many set examples, it is not known how the government and State-owned enterprises are willing to make interest concessions to get the involvement of the private sector. There are reports that some public-private partnership projects are not attractive and that the weight of private companies are far less than their shareholding in a State company. So it is indeed up to the government to treat the private sector equally instead of merely seeing it as a source of financing.

The authorZhou Feng is a Shanghai-based financial analyst. The views do not necessarily reflect those of China Daily.