Annual Report 2021

China Merchants China Direct Investments Limited Annual Report 2021 30 INVESTMENT MANAGER’S DISCUSSION AND ANALYSIS (CONTINUED) PROSPECTS The pace of the global recovery is expected to slow due to the persistent coronavirus disease pandemic, while many countries begin to withdraw policy support and economic stimulus, and while severe supply chain bottlenecks remain. The prospects for global economic growth face a number of downside risks, including the potential emergence of new virus variants, rising inflationary expectations and increasing volatility in capital (such as equities, bonds) markets. It is expected that the development of China’s economy will assign greater importance to the promotion of industry transformation and upgrade and to people-oriented urbanisation, in order to hedge against these downward pressures on economic growth. Given that China’s overall economic growth environment is expected to stabilise in 2022 and that China’s economic restructuring is at a new starting point in the “14th Five-Year” plan, it is expected that the operating results of the investment projects (mainly operating in China) held by the Fund may improve to a certain extent. According to the principles of the Central Economic Working Conference held in December 2021, China’s economic growth should give priority to stability, while also striving for progress in 2022, with all government units across China carrying a shared burden to stabilise the national economy and to adopt policies beneficial to economic stability. For policies adopted, they should be implemented well in time. The seven policy deployments are: (1) to ensure that macro policies are solid and effective, (2) to use micro policies to stimulate the vitality of main market players, (3) to adopt structural policies to help national economic circulation flow freely, (4) to develop technology policies that are sound and implementable, (5) to encourage policies of reform and openness in order to activate growth potential, (6) to seek regional policies that strengthen the balance and coordination of development and (7) to support social policies that bring greater security to people’s livelihood. Given that China’s economy shows both resilience and great potential, its long-term economic outlook for prosperity has not changed and the potential for investment demand remains strong. As an example, the AI industry and new-type infrastructure construction will continue to receive greater support from government policies, as well as more attention from capital markets. With the advent of the big data era, along with improvements in algorithms and enhancements in the accuracy of unsupervised learning, AI enters a period of rapid growth in which “big data + AI” will profoundly change the structure of traditional industries. It is here that the Fund will continue to seek out the best opportunities for investment.