The medical device industry will see more development opportunities next year.

   Recently, at the China Medical Device Industry AssociationAt the 2019 Industrial Annual Conference, Tang Min, a member of the State Council and the China 50 Economists Forum, interpreted the newly released "Communiqué of the 2019 Central Economic Work Conference" (hereinafter referred to as the "Communiqué") and stated that the global economy will slow down sharply next year, and the domestic economic situation also emphasizes the importance of stability. However, judging from the new spirit and new approaches mentioned in the Communiqué, the medical device industry, as an advanced manufacturing industry and a sector related to people's livelihood, still has more and better opportunities.

 1. "Stability" as the Priority: Difficulties Will Not Decrease Next Year

   After the release of the Communiqué, someone specifically counted the number of times the word "stability" appeared in the Communiqué—39 times. Why should 2020 prioritize "stability"? Tang Min said that both globally and domestically, next year will be a very unstable period. Therefore, from the perspective of national policy, "stability" should be prioritized.

   "From an international perspective, the global economy will slow down sharply. If it doesn't happen next year, a major economic recession will occur the following year." He said that domestically, structural, systemic, and cyclical problems are intertwined, resulting in a "triple superposition" effect. Globally, foreign growth is slowing down, and the world is still in a deep adjustment period after the international financial crisis, with significantly increased sources of global instability and risks. "If this year was a difficult year, next year's difficulties may not be fewer, because we are in the midst of a major adjustment process."

   Regarding the impact of the Sino-US trade friction on China, Tang Min said that if we look at exports to the United States, when each list comes out, companies may rush to place orders in the short term, and exports may increase, but they will quickly decline sharply, generally by about 30%. "By 2030 at the latest, China's GDP will surpass that of the United States. In this process, competition will be very fierce because the United States now regards China as its main strategic competitor, and it will mobilize all its forces to deal with China." He said that regarding the Sino-US trade friction, it is not short-term. Even if the first phase of negotiations is successful, there will be continuous battles in the future in Sino-US trade, technology, and even finance, and companies should also be prepared for the long term.

   2. New Opportunities Under the New Development Concept

   The Communiqué proposed six major tasks, the first of which is to "unswervingly implement the new development concept." This is the first time that the Central Economic Work Conference has proposed the implementation of the new development concept. "In the past, our development concept was to pursue growth, mainly focusing on GDP growth; development was the absolute truth. The new development concept prioritizes innovation, followed by coordination, green development, openness, and sharing. The Central Economic Work Conference specifically mentioned the need to address various imbalances and inadequacies and to focus on structural adjustments," said Tang Min.

   The Communiqué proposes to "continue to implement proactive fiscal policies and prudent monetary policies." Regarding proactive fiscal policies, it emphasizes "compressing general expenditures," ensuring key areas, and supporting grassroots governments in maintaining wages, operations, and basic livelihood. Regarding tax cuts and fee reductions, Tang Min stated that although significant efforts were made this year, many companies did not feel the benefits of tax cuts. Next year's fiscal policy will focus more on implementing, consolidating, and expanding the effects of tax cuts and fee reductions. The prudent monetary policy emphasizes "reducing the cost of social financing" and working together with policies related to consumption, investment, employment, industry, and regions, indicating that monetary policy needs to increase support for both supply and demand in specific industrial sectors.

   For enterprises, the Communiqué also mentions "guiding funds towards advanced manufacturing, people's livelihood projects, and infrastructure shortcomings that benefit both supply and demand and have a multiplier effect." "This is very valuable. In the past, when we talked about investment, we first thought of infrastructure investment. Now, we should focus on manufacturing, especially advanced manufacturing, as the main direction of our investment." Tang Min said that the medical device industry belongs to the advanced manufacturing industry that the state prioritizes and supports, and this "multiplier effect" investment will greatly promote the development of the entire industry.

   The Communiqué also specifically mentions "increasing medium- and long-term financing for the manufacturing industry." "What does medium- and long-term financing rely on? It relies on equity investment. This indicates that next year, the stock and bond markets, especially for enterprises, may be further relaxed, and more effective measures will be taken to increase medium- and long-term investment in the manufacturing industry," Tang Min emphasized.

   Regarding the Communiqué's proposal to "deepen market-oriented reforms and opening up in areas such as medical care and elderly care," Tang Min particularly stated that the medical device sector should focus on market-oriented reforms, and future administrative intervention may be reduced. Whether it is short-term financing from banks or long-term financing from capital markets, investment will be increased based on the industry's market performance, profit situation, and future development potential. As these sectors accelerate opening up, the demand for medical devices will be greater and more, and the requirements will be higher. "The medical device sector is both an advanced manufacturing industry and an area that the state prioritizes and supports investment in, and it is also an area that is particularly needed in the new development concept, so it presents good opportunities. The market is more open, but whether enterprises can seize this opportunity, whether they can conform to the country's major development direction, especially whether they can meet market demand and withstand stronger competition, depends on the capabilities of the enterprises."

   Tang Min's Profile

   Member of the State Council and the China 50 Economists Forum; served as Chief Economist at the Asian Development Bank's China Representative Office in 2000; served as Deputy Secretary-General of the China Development Research Foundation of the Development Research Center of the State Council from 2007 to 2010. Since 2010, he has been appointed as a member of the State Council. From 2007 to 2011, he served as Vice Chairman of the Department Committee of the Graduate School of the People's Bank of China. Mr. Tang Min is an adjunct professor at Peking University, Wuhan University, and Jinan University, chairman of the Expert Advisory Committee of the School of Economics and Management of Wuhan University, a member of the China Education 30 Forum, and a council member of the Overseas Chinese Association. His main research areas are macroeconomic analysis, inter-regional economic cooperation, economic development strategies, and international financial business.