Credit Suisse has identified a clutch of consumer stocks it believes will benefit from Beijing's 12th five-year plan, which aims to boost domestic consumption in an economy normally driven by exports and infrastructure investment.
The bank tipped the top performing stocks in China for the next five years as Air China, China Mobile, Citic Securities, Ping An Insurance, Tencent Holdings, shipping conglomerate China Merchants Holdings, cigarette box printer Amvig, shoe retailer Belle International, high-street lender CMB, China Vanke, personal hygiene product maker Hengan International, Sinopharm, Sany Heavy Industry and television maker Skyworth.
But some economists question whether Beijing can redirect the mainland's economy towards higher consumption, which would requiring raising the yuan's value, convincing the thrifty, ageing population to stop saving for retirement and raising interest rates, restricting bank lending to government projects.
In an interview, Vincent Chan, Credit Suisse's head of China research, argued that the central government can allow the yuan to appreciate 27 per cent by 2015, reaching 5.30 against the US dollar, without causing exporters to shed jobs and creating mass unemployment.
Chan said the mainland's ageing population meant the number of 15-19 year olds entering the manufacturing labour force would fall over the next five years. 'I think the case for China to be more lenient about labour wage increases and a bit more aggressive on currency appreciation is there,' Chan said.
Many China watchers fret that aggressive mainland bank lending will cause a pile up of bad loans from wasteful property and infrastructure projects.
