This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

China's Economic Reform Goals Are Bullish for Global Economy

Stocks in this article: WMT BA KO

NEW YORK (TheStreet) -- Asian markets reacted bullishly Monday to new economic reform goals from China.

Released after a four-day meeting of top Communist Party officials, the objectives are the first major economic reform push from President Xi Jinping, who took office this year.

Because China is the largest trading partner for many nations, financial markets are interpreting this policy document as bullish for  regional and global economic growth. The world's financial sector, in particular, has been looking for the economy of the world's most populous nation to evolve from being export-driven to consumer-driven.

Following are some of the goals Beijing included in the statement:

Opening up the country's financial markets.

Changing registration for stock market listings, which will encourage more foreign investment.

The introduction of a bank deposit insurance program that will create confidence in the country's financial institutions.

Interest-rate liberalization aimed at encouraging savings and rewarding investors.

Reducing state ownership of businesses.

Encouraging competition among private firms.

Reform of the country's household registration system, which has an impact on matters ranging from employment to social benefits.

Greater protection for the environment.

Doing away with labor camps.

Promoting social security programs to provide a safety net.

A relaxation of the nation's infamous one-child policy, to increase the number of consumers and workers.

The financial market measures are particularly needed. Beijing needs to allow market forces to determine the value of its currency and interest rates. It also needs to develop greater depth in its capital markets to allow for a more responsible regime of financing development and spending within the country.

Doing away with the one-child policy will lead to an immediate increase in consumer spending. In the long term, it will also provide a greater pool of workers. That is much needed as a shortage is anticipated. More workers will also facilitate the financing of social security programs. The new safety net being created will provide a foundation of consumption for all in China.

This is bullish for companies looking to tap increasing consumer demand in China. Coca-Cola (KO), Wal-Mart (WMT), and Boeing (BA) all have announced massive expansion programs in China. Coca-Cola has announced that it plans to invest $4 billion in China from 2015 to 2017. Mike Duke, Wal-Mart's CEO and President, recently stated that the world's biggest retailer would be 110 new super centers and Sam's Clubs over the next three years in China. The newest version of the Boeing 737 has been touted as being ideal for the regional markets in China.

Commodities such as copper, coal, and iron ore should all gain from increasing consumer demand. China uses more coal, copper and iron ore than any other country. All are needed in the construction process and the operating of factories, farms, machinery and machinery. Increasing growth in China is positive for all of these commodities.

Overall, the economic reforms being advocated are bullish for the global economy.

Greater consumption in China will do much to stabilize the balance-of-payments in international trade. The huge trade surplus of the People's Republic is not in the best interest of growth around the world as the world's most populous nation and second largest economy needs to be consuming more.

At the time of publication, Yates had no positions in stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.


Jonathan Yates is a financial writer who has had thousands of articles appear in periodicals and Web sites such as TheStreet, Newsweek, The Washington Post and many others. He has degrees from Harvard University, Georgetown University Law Center and The Johns Hopkins University.

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs