While China might be facing economic headwinds, investors are likely to have long-term growth opportunities, as the country is on track to reaching high-income status by 2027, according to a new Morgan Stanley report. 

In the next decade, China’s MSCI Index, which is designed to measure equity market performance, is likely to outperform other emerging markets, according to the US investment bank. As the country transitions to high value-added manufacturing and service industry, it will also see a surge in per capita income from 8,100 US dollars now to 12,900 US dollars by 2027.    

China’s service sector will be the fastest growing sector, according to the projections, contributing to 60 percent of GDP by 2030. Private consumption is expected to reach up to 9.7 trillion US dollars by then. 

The economic growth will also be fueled by structural reforms and the closure of “zombie enterprises” and cutting down on overcapacity in industries. 

Last year, China’s State Council said that the country will make “substantial progress” in five areas, including cutting overcapacity, destocking, deleveraging, lowering costs and improving weak links, in 2017.   

"The most significant development on the policy front is that policymakers are now signaling a willingness to accept slower rates of growth, and place more focus on preventing financial risks and asset bubbles, indicating that they would not protect growth at all costs, ”according to the report.

However, Morgan Stanley has predicted a lower average growth rate of 9.6 percent of the last three decades. China’s growth rate between 2021 and 2025 is expected to be an average of 4.6 percent.    

(With inputs from agencies)