In 2016, the slowdown of private investment was rather serious. Anbound Think Tank proposes to encourage private capital into a consortium, vigorously developing the consortium economy; yet it would be difficult to see results in short period of time. In this regard, the Yunnan Baiyao Group recently introduced capital increase to attract New Huadu Group; the ownership structure will be changed from 100% hold by the State-owned Assets Supervision and Administration Commission (SASAC) of the Yunnan Province to 50% by SASAC of Yunnan Province and another 50% by New Huadu Group, and we can learn from this example. The local government has shown great sincerity and integrity that protects the interests of investors. We believe that if all local governments show sincerity and integrity as well, stimulating private investment will no longer be a problem.

With AlphaGo and "Master" that show the level of intelligence in decision-making that rivals human in chess games, we can clearly conclude that the world has come to a new turning point. In the future, the technology that determines the status of a country in the world will be artificial intelligence. Anbound Think Tank"s chief researcher Chen Gong believes that the future development of artificial intelligence has two focuses; the first is the continuous improvement of artificial intelligence, such as computing speed and intelligent learning ability; another focus is the application of artificial intelligence. There are reasons to believe that the application of artificial intelligence in this century will inevitably lead to continuous huge surprises.

For a long period of time, China"s tax system fails to regulate the national income distribution and narrow the social gap between rich and poor play its due role, instead it aggravates the national income inequality. For enterprises, the tax burden is equally heavy, leading to deterioration of business prospects, and causing low investment will. Anbound Think Tank"s research team believes that it is time to start or move ahead with the corresponding tax reform. This year"s fiscal development also requires steady progress in tax reform, promoting reform and transformation, to ensure that China"s economic future can access to institutional advantages in order to achieve developmental balance.

2017 will be the year of the 19th National Congress of the Communist Party of China; it is also the year of utilizing practical works to promote real results. Among these, promoting and maintaining the stable development of the domestic stock market for the stability of the market, the confidence and the exchange rate are especially crucial. Is there any possibility for China"s stock market to rise? We believe that there is. First, from a macro perspective, the national policy will further stimulate the market index; second, the Chinese stock market has the rebound space and possibility; third, the domestic and international market expectations of A shares have begun to change; fourth, the strict domestic stock market regulation has effectively remediated the stock market; fifth, China"s stock market will adopt a "double import" policy to enhance the market. As Anbound chief researcher Chen Gong predicts, the 2017 stock market will be better than in 2016, which would be no surprise.

Recently, China"s State Council executive held a meeting and discussed on the opening-up to actively use foreign investment in a number of measures, a statement will soon be introduced. The CPC Central Committee and the State Council are preparing an in-depth implementation plan of a new round of high-level opening up, which will speed-up the pace and the strength of the opening-up. Increasing development and opening-up of the service sector is an important suggestion made by Anbound Think Tank. There is the trend of China’s manufacturing industry "going out" in the country’s industry and market, while the service sector “going in”. Anbound’s chief researcher Chen Gong suggested that, with the supply-side structural reform, there is the need to attract foreign service industry and opening-up. With these, China will still be the world"s investment destination in the future. Now, the country once again increases its efforts to attract foreign investment especially foreign service industry, that is an excellent example of Anbound’s recommendations.

Yesterday, China Foreign Exchange Trade System announced that the weight of US dollar in its currency basket will be lowered 4% from 0.2640 to 0.2240, which suggested a vital step of responding to yuan"s devaluation, and furthermore, it verified ANBOUND’s previous proposal on adjusting the dollar weight. Our chief researcher Chen Gong has stated that though there are several currencies in the basket besides US dollar, among which the dollar weights below 50%, the basket is too largely affected by the dollar to get rid off it. We have reasons to believe that China’s central bank decisively lowering dollar’s weight has shown its’ determination and action in dealing with the problem of yuan’s exchange rate.

Recent years, the domestic economic growth, demands on insurance products from both residents and companies, and the national policy support have contributed to the rise of China"s insurance industry. However, where the industry goes in the future, and how the regulators are to effectively supervise, reduce risks? ANBOUND recommends that the regulators first of all are supposed to grant insurance license more cautiously with strict standards; second is to speed up the construction of financial infrastructures; third, the difficulty in allocating the insurance capital next year will see a increase due to some factors, such as the fast gathering of capital, great challenge faced by the qualified assets, and the "going out" insurance capital is slowing down. Last, the regulators have to upgrade their ability to deal with the risks, remove more regulatory drawbacks, improve the risk management mechanism, and build up the risk firewall.

Throughout the coming 2017, the largest extra uncertainty without doubt will be the America under Donald Trump"s administration. ANBOUND chief researcher Chen Gong has suggested that China can deal with him with the principles of "ignoring, making no reply, and nothing more or less". That means we just focus on our affairs, no matter how Trump dose and what he says; carry the pacifism flag; regarding the specific interest conflict, we take the matter on its merits, do not give up in easily. China could take advantage of the time wasting tactic, and will be success if the tactic lasted for four years. More importantly, China should value Europe as its new focus of global cooperation and new field for development.

The High Frontier strategy proposed by the United States in the 1980s aimed to use the high-tech advantage of the country to establish a space weapon system and provide space defense means to deal with strategic nuclear weapon attacks. So how can China stably join the "high frontier"? Anbound Think Tank believes that as a latecomer, China does not propose its "high frontier strategy", and it does not have the mean to do so. According to the 2016 China Aerospace White Paper released by the Chinese State Council, China is ambitious for its aerospace"s future performance but it also needs to enhance the level of space technology and expands the application ability in the fields of science and technology, military and economy, in order to truly become an aerospace power’s "high frontier".

In this year"s communique on the Chinese Central Economic Conference, it is again clear that China should actively and steadily push forward the reform of the financial supervision system. Anbound research team believes that emerging financial risks is a warning of the current financial regulatory lag. For the future financial regulatory system reform, there is the need to pay attention to several issues. First, the financial regulatory system reform is part of the supply side structural reform. Second, there is the need of changing way of thinking for the future financial regulation, and restraining risks through reform and strengthening the management, changing from the passive and defensive measures to the proactive reform and breakthrough measures. Third, both the local government and commercial banks should not use risks as an excuse to "blackmail" the Central Bank, forcing the Central Bank to inject the currency. Fourth, based on market-oriented financial supervision and financial governance, institutionalized reform should be executed to improve the system and policies to form long-term mechanism.

As the year is about to end, all local governments have started convene meetings to deploy next year"s economic work; the central focus for the local economic work in 2017 is the "revitalization of the real economy" highlighted by the Central Government. However, implementing this effectively will be a real problem. Anbound research team believes that the revitalization of the real economy can be from the three perspectives of the market, the government and intermediary services. In the government"s perspective, there is the need to deregulate and open up the market, especially in breaking the dual factors of production factors and this should be done thoroughly. There is also the need to reduce the tax burden and reform the tax system; in fact the complaint of many private enterprises is not tax rate but the tax system, and that the government administrative processes are discriminative and inefficient. Next, there is also the need to strengthen services and management efficiency to encourage financial institutions and other professional intermediary service agencies to develop and improve the enterprise development environment.

Fuyao Glass President Mr. Cao Dewang"s comparative argue over the manufacturing cost between China and America has raised hot debates among Chinese officials, business and academic sectors. However, ANBOUND’s chief researcher Chen Gong points out that the data about the difference between China and American manufacturing only provides reference. For China, the overwhelming of cost growth over the increase of productivity should be the main focus. The gap will further impose structural effect on Chinese economy over the long run. Therefore, the coming policies in the near future are better to swift toward reducing the corporate cost and increasing the labour productivity.

Recently, the financial market has witnessed the boom of bond default. ANBOUND research team notices that the boom is closely related to the downturn of both global and China"s economy, weak demands, worsening business environment, and the broken capital chain. Particularly, the SOEs and local government’s debts keep climbing due to soft budge constraint, the market fundamental functions and settings suffer shortage, and multiple regulators are involved into the supervision. While responding to the potential risk is a systematic task, besides taking the measures to reduce corporate debt pressure such as debt-to-equity swap and assets securitization, the government should comprehensively implement proper policies, and do their best to minimize the possible shock brought by bond default.

According to the official source, the 25th session of the 12th NPC Standing Committee held on 25th December is likely to resolve the problem of equal market access of urban-rural land and their equal right and price. We see this progress as a sign of significant breakthrough of land reform, particular the rural land. But the question is how to push it? We have proposed an idea previously, namely, granting the rural land with long-term usage right as same as the urban land, and allowing the urban capital to purchase rural land and its long-term usage right without touching the land ownership. At the same time, the government could allocate most of the land profit between farmers. Moreover, the house with limited property right shouldn"t be neglected, as it is possible that the current land management law would grant general pardon to those properties.

Two telecommunication companies under Cosun Group that have issued privately raised company bond via Zhaocaibao platform in 2014 now faces default risk due to capital difficulty. ANBOUND research team has paid close attention to the problems behind it and found that there is a huge regulatory lacunae in the new bond launching channel that is created by the cooperative sales of "privately raised company bond" between regional stock exchange and internet platform. Addition with unaccountable financial frauds, significant potential risks have accumulated. Internet finance now has become a “snake in the grass” of financial industry, the regulator shouldn"t relax both the supervision and control.

On 21st December, Taiwan"s "friendly nation" San Tome and Principe suddenly claimed for breaking up its relationship with Taipei, which raised the later to worry about that the other 21 “diplomatic allies” will follow the STP’s step. In ANBOUND’s view, Taipei’s “diplomatic pressure” largely relates to Tsai Ing-wen’s deny of 1992 Consensus, her telephone communication with American’s would-be President Donald Trump, as well as American’s attitude toward “One China” principle. Recently, American President Barack Obama signed the National Defense Authorization Act and accordingly it will upgrade the communication level between American and Taiwan’s military. Taipei expressed thanks to America. Given these reasons, Taipei inevitably will be the pawn in the political game between China and the US.