In January, CPI rose 2.5% year-on-year and PPI rose 6.9% year-on-year, both exceeding market expectations. The year-on-year CPI increase hit its highest level in nearly three years, while PPI reached a new high in more than five years. If not for the adjustment of CPI weights in early 2016, the growth rate would have been even higher than 2.5%.

Investment enthusiasm has never waned, but real estate cannot be the investment hotspot this year. Recently, real estate has come under pressure again. On the evening of February 13, the Asset Management Association of China issued through its official WeChat account the “Filing Management Specification No. 4 for Private Asset Management Plans of Securities and Futures Operating Institutions—Private Asset Management Plans Investing in Real Estate Development Enterprises and Projects,” regulating behaviors such as private asset management plans investing in ordinary residential real estate projects in 16 hotspot cities where housing prices have risen too rapidly, and providing financing to real estate development enterprises for paying land transfer fees or supplementing working capital. These 16 cities are Beijing, Shanghai, Guangzhou, Shenzhen, Xiamen, Hefei, Nanjing, Suzhou, Wuxi, Hangzhou, Tianjin, Fuzhou, Wuhan, Zhengzhou, Jinan, and Chengdu. Basically, all the popular cities with relatively fast housing price increases are included.

Of course, a sharp drop in housing prices is impossible. The rapid formation of city clusters and the reduction of inventory in the aforementioned popular cities have forged an ironclad bottom for real estate.

This year, investment funds are not heading toward real estate. So where are those trillions of yuan heading with great strides? What we see now are the already frenzied futures market and the gradually improving stock market.

On February 13, the domestic commodity market rose, with ferrous futures varieties continuing to lead. The bellwether iron ore rose to a three-year high, and coke rose nearly 5%. Nonferrous metals surged strongly, with Shanghai copper soaring more than 5% to a new stage high. Chemicals also rose collectively, with asphalt once hitting the daily limit, followed by rubber and methanol. Apart from agricultural products, which were somewhat jittery, other varieties were enthusiastically sought after. The infrastructure sector, the “Belt and Road” sector, and the nonferrous metals sector in the Shanghai and Shenzhen markets also soared.

The recent trend in futures and stocks is related to substitution for real estate.

We must first ask: what can replace real estate to stabilize GDP? The answer is infrastructure investment.

On February 13, 21st Century Business Herald published an article whose disclosed data was startling. According to data published by provinces after their local two sessions concluded (at the time of publication, only Hainan Province had not yet held its sessions), at least 16 provinces had fixed asset investment exceeding GDP. The 22 provinces that clearly announced 2017 fixed asset investment targets had cumulative investment targets exceeding 40 trillion yuan. Among them, 16 provinces had 2017 fixed asset investment accounting for more than 100% of 2016 GDP, mainly western provinces, which rely heavily on investment-driven growth.

The dazzling infrastructure investment data shows that the main space is still in the infrastructure sector.

China is not only carrying out large-scale infrastructure construction domestically but also on a large scale abroad, which has incidentally fueled the “Belt and Road” concept. How hot is it? Wang Wen of the Chongyang Institute for Financial Studies at Renmin University of China said: “In 2016, when I went to Iran for research, the five subway lines under construction in Tehran were all built by Chinese companies. In the next 10 to 15 years, 10 more cities in Iran will develop subways like Tehran, almost all built by China.”

Chinese enterprises are building railways abroad, including high-speed rail, highways, bridges, subways, and ports, laying internet infrastructure, building WIFI, and constructing base stations. According to published projects, “railways, highways, and infrastructure” dominate, accounting for 68.8% of total investment. According to data released by the Ministry of Commerce, in terms of overseas contracted projects, from January to November 2016, Chinese enterprises signed 7,367 new overseas contracted project contracts in 61 countries related to the “Belt and Road,” with a new contract value of US$100.36 billion, up 40.1% year-on-year, accounting for 52.1% of China’s newly signed overseas contracted project value during the same period; completed turnover was US$61.63 billion, up 7.5% year-on-year, accounting for 46.6% of the total during the same period.

Regardless of future conditions, such huge orders at present are making relevant resource enterprises smile from ear to ear.

All these investments, together with supply-side structural reform to cut overcapacity, state-owned enterprise reform, and other measures, have turned around industries such as coal and nonferrous metals that were once in a less favorable situation.

However, it should also be noted that the rise of these concept stocks is the result of imagination. If the efficiency of state-owned enterprises cannot be improved and overseas investments are not profitable, the cup of revelry will soon be taken away, and investors will also fall into deep desolation after sobering up.