A policy document released by the Chinese authorities on Wednesday focuses on agricultural modernization in the country and also generates opportunities for investors in terms of modern agriculture, rural e-commerce, food security and rural tourism.
--- Modern agriculture
The "No. 1 central document", publicized by the Central Committee of the Communist Party of China and the State Council, vowed "marked progress" in agricultural modernization by 2020 to ensure the building of a moderately prosperous society. The "No. 1 central document" is the name traditionally given to the first policy statement of the year and is seen as an indicator of policy priorities. Output capacity should be improved to ensure grain security and supply, while the urban-rural income gap must be narrowed, according to the document. Meanwhile, the country will make overall plans for and coordinate various agricultural technological resources, build technological innovation centers for modern agricultural industry, implement important projects for agricultural technology innovation, and make breakthroughs in key technologies involving biology breeding, agricultural equipment, intelligent agriculture and ecological environmental protection.
Investors can focus on companies such as Gifore Agricultural Machinery Chain (300022.SZ) and First Tractor Co., Ltd. (601038.SH).
--- Rural e-commerce
A unified, open, competitive market for modern agricultural products needs to be established to promote agricultural products. To this end, logistics cost will be reduced while rural e-commerce will be encouraged, the document says. The country will quicken the pace to realize a full broadband coverage in administrative villages and make efforts to increase Internet speed and cut costs in the rural areas, and accelerate construction of the logistics service systems and facilities, according to the document.
On China's A-share market, investors can focus on companies including Shenzhen Batian Ecotypic Engineering Co. (002170.SZ), Shenzhen Noposion Pesticide Co. (002215.SZ), Kingenta Ecological Engineering Co. (002470.SZ) and Shindoo Chemical (002539.SZ).
--- Food security
New national standards on food safety will be prioritized and standards on pesticides residues and veterinary drugs will reach the international standards by 2020, says the document. The country will increase efforts to improve supervision systems of farm product quality and food safety, build full-course traceable, interconnected and shared information platforms, and improve the risk monitoring and evaluation system and the inspection and testing system.
Investors can focus on companies including Yuan Longping High-tech Agriculture (000998.SZ), Shandong Denghai Seeds (002041.SZ) and Muyuan Foods Co., Ltd. (002714.SZ).
--- Rural tourism
China will also vigorously promote development of leisure agriculture and rural tourism as tourism could offer alternate income streams for farmers. Meanwhile, the authorities will actively guide private capital to develop leisure tourism projects that more farmers participate in and set up industry investment funds to support development of leisure agriculture and rural tourism and improve infrastructure services for the rural tourism, according to the document.
Investors can focus on companies including Luoniushan (000735.SZ) and BTG Hotels (Group) Co., Ltd. (600258.SH).
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