Currently, China’s economy is evolving toward a stage characterized by more advanced forms, more complex division of labor, and a more rational structure, marking the entry of economic development into a “new normal.” The pace of economic growth is shifting from high-speed to medium-high-speed growth. The mode of economic development is transitioning from extensive growth driven by scale and speed to intensive growth focused on quality and efficiency. The economic structure is undergoing a profound adjustment, moving from primarily expanding capacity through incremental additions to a dual approach that involves both restructuring existing assets and optimizing new ones. Finally, the driving forces behind economic development are shifting from traditional growth engines to new growth drivers. As an integral part of China’s economic development, the asset valuation industry—a modern, high-end service sector—represents a crucial professional force in the construction of a market economy. Accurately grasping the “new normal” and proactively adapting to it are of paramount importance for the future development of the asset valuation industry.

1. The asset valuation industry is an integral component of China’s economic development.

Asset valuation possesses independent and objective functions of value discovery and verification, serving as an important tool for optimizing resource allocation and maintaining economic order. After more than two decades of development, China’s asset valuation industry has become an indispensable professional force in the country’s economic development. It plays a crucial role in safeguarding the rights and interests of asset owners, standardizing capital market operations, preventing financial risks, protecting public interests, and ensuring national economic security. Moreover, it has made positive contributions to promoting economic system reform and structural adjustment, as well as maintaining the order of the market economy and fostering social progress. The asset valuation industry has now become an integral part of China’s economic development.

First, asset valuation has emerged alongside the reform of the economic system and the development of the market economy. In the 1980s, asset valuation emerged in the context of China’s opening up to the outside world and the reform of state-owned enterprises. As China’s reform and opening-up efforts have continued to deepen, the importance of asset valuation has grown steadily. Initially focused on strengthening the management of state-owned assets and safeguarding their rights and interests, asset valuation has gradually evolved into a crucial professional pillar supporting economic system reform, the development of a market economy, and the transformation and upgrading of enterprises. Second, asset valuation has already permeated all industries and sectors of the national economy and social governance. With the development of China’s economy and society, the field of asset valuation services has continued to expand, covering nearly all sectors of the national economy and virtually every aspect of socio-economic activity. The range of clients served has steadily broadened, and the professional content has become increasingly sophisticated. In particular, asset valuation has played a crucial professional role in supporting the deepening of enterprise reform and the development of a mixed-ownership economy, the construction of a modern financial system and capital markets, forensic appraisals and social governance, government asset management, and related institutional reforms. Its Third, asset valuation has become an important component for the smooth operation of the market’s institutional mechanisms. The market economy is founded on the efficient allocation of production factors, and asset valuation serves as a crucial support in the process of achieving such efficient allocation. The market economy requires rational judgments about value, and these value judgments must be underpinned by scientific asset valuation. Under market economic conditions, all forms of value expressed in monetary terms can be addressed through valuation. Asset valuation performs the fundamental functions of value discovery and value measurement, playing an important role in promoting fair transactions among market participants, maintaining a normal economic order and trading environment, and providing vital safeguards for the smooth operation of the market economy. As a result, asset valuation is increasingly recognized and valued by markets, enterprises, governments, and various sectors of society. Fourth, asset valuation has become an important component of the modern service industry. The asset valuation industry is a high-end, modern service sector whose key characteristics are the complexity of its specialized technologies, the breadth of its business domains, and the diversity of its service recipients. In 2012, the State Council issued the “12th Five-Year Plan for Service Industry Development,” explicitly including asset valuation within the business services category of the productive service industries. 2014 The “Guiding Opinions of the State Council on Accelerating the Development of Productive Service Industries and Promoting the Adjustment and Upgrading of Industrial Structure,” issued in 2014 (Guofa [2014] No. 26), proposed actively developing professional consulting services such as asset valuation, accounting, auditing, taxation, surveying and design, and engineering consulting. Many government departments have also recognized asset valuation as an important component of modern service industries, elevating its status to an unprecedented level. Fifth, the legal system for asset valuation constitutes an important component of the rule-of-law framework for building a market economy. The legal system for asset valuation is an important component of the economic legal framework. At present, a preliminary asset valuation legal system has been established, which is generally guided by relevant provisions in laws such as the Company Law, the Securities Law, and the Law on State-Owned Assets of Enterprises, as well as by the "Administrative Measures for the Valuation of State-Owned Assets" promulgated by the State Council. This system is primarily composed of departmental regulations on asset valuation issued by government authorities including the Ministry of Finance, and is supported by judicial interpretations issued by judicial organs, normative documents issued by government departments, and professional practice guidelines for asset valuation released by industry associations. Under the protection of this legal system, asset valuation is playing an increasingly important role in promoting economic development and strengthening the rule of law.

II. New Characteristics and Trends in the Development of the Asset Valuation Industry under the New Normal of the Economy

Asset valuation is closely linked to economic development. As China enters a “new normal” economy and continues to deepen reform comprehensively and implement the strategy of governing the country according to law, profound changes will take place across all sectors of the Chinese economy and society. This new normal and these new developments will have far-reaching and significant impacts on both the endogenous driving forces and the external environment for the development of asset valuation. Thoroughly studying and analyzing the new characteristics and trends in the development of the asset valuation industry under the new economic normal is of great importance for the future development of the industry. These impacts are mainly reflected in the following aspects.

(1) The market landscape is undergoing profound changes, with traditional market structures undergoing deep adjustments, the scope of emerging markets continuously expanding, and untapped market opportunities urgently awaiting discovery. In response to the new normal in economic development, traditional markets will undergo changes along with shifts in economic development models and structural adjustments, while emerging markets, as economic growth drivers strengthen, will emerge as new growth engines. Meanwhile, potential markets will continue to develop amid industrial transformation and upgrading, adjustments to government functions, and especially reforms of the fiscal and tax systems. First is the traditional market, The reform, which involves transforming state-owned enterprises and shifting toward a mixed-ownership economic model, has led to an expansion of the scope and deepening of the substance of state-owned enterprise assessments, as well as the development of multi-level capital markets and the broadening of space for financial services. Second, emerging markets, The scope of application has expanded to encompass all sectors and aspects of economic development and socio-economic progress. In particular, since the Third Plenary Session of the 18th CPC Central Committee, the State Council has introduced a series of new policies covering property rights systems, financial reform, state-owned enterprise reform, cultural market development, and resource and environmental reform. The country has placed greater emphasis on leveraging the positive role of asset valuation in areas such as market-based allocation of resources, property rights reform, ecological and environmental construction, reform of the cultural and technological systems, and public services, thereby creating new market opportunities and growth drivers for the asset valuation industry. Third, the potential market, As the economic structure shifts from a focus on incremental capacity expansion to a deep adjustment that involves both restructuring existing assets and optimizing new ones, asset valuation has great potential in areas such as the development of modern financial services, the growth of the internet and IT industries, internal controls over the financial quality of corporate assets, and fair-value measurement. Asset valuation supports the transformation of government functions, giving rise to fiscal project management and performance evaluation assessments that serve tax and fiscal reforms, as well as PPP initiatives. (A public-private partnership model) offers a wealth of potential markets, including property tax base assessment, local debt management, government asset management, comprehensive government financial reporting, and government procurement of services.

( 2) The market demand is undergoing structural changes: traditional, low-end services are in oversupply, while emerging, high-end service capabilities are insufficient. The industry’s transformation and upgrading toward higher-value services still have a long way to go. The asset valuation market is characterized by structural overcapacity alongside insufficient service capabilities under the new normal. Valuation firms are facing excessive competition in the traditional market. However, it is difficult to seize the new market opportunities that emerge from structural shifts in economic trends. First, traditional, low-end services, Traditional statutory appraisal services, such as Sino-foreign joint ventures and cooperation, as well as the restructuring of state-owned enterprises, are characterized by government departments and relevant regulatory authorities implementing a filing-based management system for appraisal projects. Given the maturity of appraisal methodologies and relatively low professional risks, asset appraisal institutions have seen a severe oversupply in the market, resulting in intense price competition for appraisal services. Second, emerging, high-end services, Market-oriented and internationalized capital market reforms, coupled with the implementation of China’s development strategy of “attracting investment” and “going global,” have created substantial new demand for asset valuation services in emerging market sectors such as high technology, light assets, intellectual property, and merger-and-acquisition premiums. Under the new normal, asset valuation institutions are struggling to develop core competitive advantages in terms of theoretical methodologies, standard-setting techniques, and professional capabilities that can effectively meet market demands. They suffer from insufficient innovation-driven growth and clearly demonstrate an inability to fully adapt their professional expertise to the needs of emerging, high-end business areas. Third, industry transformation and upgrading, Currently, asset valuation firms should adopt different strategies for various sub-markets: consolidate and deepen their presence in traditional markets, expand and cultivate high-end markets, and strive to make valuation services more routine and stable. Due to an unreasonable institutional layout—characterized by relatively few large-scale asset valuation firms and a greater number of small- and medium-sized firms—competition among firms serving high-end business is insufficient, while competition among those serving low-end business is intense. As a result, it is difficult for these firms to meet the diversified demands of economic and social development, making the task of transforming and upgrading the industry extremely challenging.

( 3) The market environment is becoming increasingly challenging: entry barriers are being relaxed, service prices are fully liberalized, and competition is intensifying. Under the new normal, economic development is exhibiting new phenomena, primarily characterized by the overlapping of three phases: the growth rate has entered a gear-shifting phase, structural adjustment is facing a period of painful adjustments, and the earlier stimulus policies are in the digestion phase. The market environment for asset valuation has undergone significant changes. First is market access, The market for pricing major asset restructurings of listed companies has taken the lead in signaling an opening-up of the market: in addition to institutions with appraisal qualifications, other specialized intermediaries can also participate in the restructuring pricing of non-state-owned asset appraisal projects. Second, service prices, In December 2014, the National Development and Reform Commission issued the “Notice on Relaxing Price Controls for Certain Services,” lifting price controls on services—including asset valuation—that had already met competitive conditions, thereby fully liberalizing the pricing of asset valuation services. Third is market competition, The market competition in the asset valuation industry is shifting toward quality and differentiated competition, and industry revenue is moving toward moderate-to-low growth. Valuation firms are beginning to undergo a process of survival of the fittest: those that adapt to the new market dynamics will rapidly grow and thrive, while those that fail to meet market demands will gradually be phased out.

( 4) The industry’s management model is undergoing significant transformation, government functions are being gradually adjusted, self-regulatory management is continuously being strengthened, and industry management requirements are becoming higher and more challenging. Against the backdrop of the country’s active promotion of streamlining administration and delegating power, as well as accelerating reform of the administrative system, asset valuation management is undergoing significant changes under the new normal. First is the government’s administrative function, The State Council issued the document “Decision on Cancelling and Adjusting a Batch of Administrative Approval Items and Other Matters” (Guofa [2014] No. 27), which abolished entry-level professional qualifications such as registered asset appraisers and replaced them with competency-based professional qualifications. In the context of the reform of the national business registration system, the requirement for minimum registered capital for company establishment has been lifted. The approval process for appraisal agencies has been shifted from a pre-approval to a post-approval procedure. The Ministry of Finance has requested that efforts be made to ensure a smooth transition in the management of appraisal agency approvals following the reform of the business registration system. Two. It's self-regulation, Through reforms in the management of professional qualifications, the government is transferring its regulatory functions—such as the assessment of asset appraisers and their management—to industry associations. The shift in the approval process for appraisal institutions also endows these associations with greater management responsibilities. As a result, industry associations will assume even greater accountability, particularly in areas such as research on new policies and the design of industry-specific systems—including key issues like the assumption of administrative functions, the development of industry management models, personnel examination and training, member registration, and institutional management. The association’s self-regulatory management functions are continuously being strengthened. Third is industry management, Following the successive cancellation of multiple administrative approval items, at its first executive meeting held in 2015, the State Council continued to streamline administration and delegate power, reducing government regulation and setting higher standards for service industries such as asset valuation. In recent documents issued by the State Council—including the “12th Five-Year Plan for Service Industry Development,” the “Guiding Opinions of the State Council on Accelerating the Development of Productive Service Industries and Promoting Industrial Structure Adjustment and Upgrading,” and the “Several Opinions of the General Office of the State Council on Financial Services for ‘Agriculture, Rural Areas, and Farmers’”—the role of asset valuation in serving the social economy has received increasing attention from the state. However, the development level of the asset valuation industry still lags behind the requirements of a market-oriented economy. To accelerate the transformation and upgrading of the asset valuation industry and promote its independent development, it is essential to proactively plan and take active measures by shifting mindsets, innovating management practices, and enhancing capabilities.

( 5) International cooperation and competition are expanding rapidly, standards are converging, and markets are becoming increasingly integrated. It is therefore inevitable that China’s valuation industry will go global. As China’s open economy has entered a new stage of development, the efforts of enterprises to “attract investment” and “go global” have begun to yield initial results, and internationalization has become an inevitable choice for the development of China’s asset valuation industry. First, the evaluation criteria, China’s asset valuation standards have achieved substantial convergence with international valuation standards, primarily in areas such as valuation concepts, valuation methodologies, and types of value. Initially, China fully aligned itself with international valuation standards; over time, it has gradually adopted a parallel approach. Now, several valuation standards have taken the lead internationally—for instance, those pertaining to non-performing financial assets, investment properties, copyrights, trademark rights, patent rights, and real options. Moreover, some other valuation standards have filled gaps that previously existed on the international stage. Second, assess the international market, 2014 Last year, China’s actual utilization of foreign direct investment (FDI) and its outbound investment both exceeded 100 billion U.S. dollars. For the first time, outbound investment surpassed the amount of FDI utilized, making China a net exporter of capital. An important measure to respond to the new normal is to actively build a new open economic system, advance the Belt and Road Initiative, replicate the successful experience of the Shanghai Free Trade Zone, promote the overseas expansion of industries with competitive advantages, engage in cooperation on advanced technologies, and actively participate in and drive the improvement and adjustment of the new round of the international economic order, thereby achieving deep integration between domestic and international markets. The Chinese asset valuation industry serves the country’s strategy of opening up to the outside world, extends service chains both domestically and internationally, and provides professional technical support for Chinese enterprises’ overseas mergers and acquisitions and multinational operations. Third, assess international cooperation, The increasingly frequent promotion of international exchanges has become an intrinsic need for the development of the industry, as well as an inevitable requirement for international appraisal peers to understand China’s appraisal development. Since its inception, the China Association of Asset Appraisers has attached great importance to international exchanges. After more than 20 years of development, it has established connections with appraisal organizations in over 50 countries and regions, signed memoranda of professional cooperation with appraisal organizations in 10 countries and regions, and engaged in various academic research and discussions with international appraisal organizations. Today, the Association has become a significant force in the global appraisal community, playing an important role in multiple international organizations. Moreover, it has successfully recommended members of the Association and industry experts to serve on the Advisory Forum Group of the International Valuation Standards Board and as members of the Professional Committees of the International Valuation Standards Board. In 2013, the World Federation of Appraisal Organizations authorized the China Association of Asset Appraisers to establish a China Office, opening a new chapter for the Association to participate more extensively in international appraisal affairs and enhance its voice and influence.

III. Proactively Adapt to the New Normal and Usher in a New Era of Assessment

2015 This year marks the inaugural year for China’s comprehensive promotion of law-based governance, a pivotal year for deepening reform in an all-round way, and also the concluding year for fully implementing the 12th Five-Year Plan. The asset valuation industry must, in accordance with the general tone and overarching requirements set forth at the Central Economic Work Conference and the National Financial Work Conference, seize the opportunity presented by the nation’s deepened reforms and its strategy of advancing law-based governance. It should proactively adapt to the new normal of economic development, focus on promoting reforms in asset valuation management practices and strengthening the rule-of-law framework within the industry, expand the market for valuation services, enhance innovation in valuation theories and standards, and drive the industry’s transformation and upgrading. Furthermore, the industry should closely cooperate with the government’s functional transformation and actively provide professional support for government asset management and fiscal and tax reforms. It should also strengthen and improve self-regulatory management systems and mechanisms, thereby fostering the sustained and healthy development of the valuation industry.

1 Strengthen market development and expand service areas. Under the new normal, China’s economic development will continue to show an overall positive trend and hold great potential for achievement. Asset valuation reflects the vitality of economic development; the more developed the market economy becomes, the broader the scope for valuing new markets and emerging fields. One is To serve the development of the mixed-ownership economy, we must actively explore specific ideas and measures for assessing the role of the service sector in fostering the development of mixed ownership, and focus on promoting economic transformation and upgrading. Second is To enhance the capital market services and improve the financial system reform, we must fully leverage the professional expertise of asset valuation services in conducting fair-value assessments during the restructuring and listing of financial enterprises as well as mergers and acquisitions and reorganizations. We should also actively promote theoretical research and practical models for valuing financial derivatives. Third is In reforming the cultural and technological systems, we must accelerate the development of guidelines related to the valuation of intangible assets of cultural enterprises, providing professional support for advancing cultural system reform and market development, and further speeding up the commercialization of scientific and technological achievements. Fourth is To support the development of ecological civilization and the environmental protection market, we must conduct in-depth research and assessment on the content and approaches related to ecological and environmental protection services, compensation for ecological resource values, carbon emission rights trading, pollution discharge rights trading, and third-party governance of environmental pollution. We should also expand the evaluation of social service functions, thereby promoting the establishment of ecological and environmental protection mechanisms and institutions as well as the development of the environmental protection market.

2 Strengthen theoretical innovation and reinforce the development of guidelines. In conjunction with the new markets and new business opportunities under the new normal of the economy, there is a need to further refine asset valuation theories, methods, and techniques, and to dynamically track emerging demands. One is Strengthen market research and assessment, actively conduct studies on the dynamics and trends of the asset valuation market, and carry out comparative studies of domestic and international valuation markets, providing valuable insights and references for the development and expansion of the valuation market. Second is Deepen theoretical research on evaluation methodologies, and advance theoretical studies on brand value assessment, asset valuation for overseas M&A by central state-owned enterprises, intellectual property pledge valuation, intangible cultural heritage assessment, and forest resource asset valuation, thereby providing professional support for tapping into new markets. Third is Strengthen the development of evaluation criteria, Focusing on key service areas such as the development of a mixed-ownership economy, the national intellectual property strategy, reform of the cultural and economic system, and management of state-owned capital operating budgets, we will strengthen research and development of relevant evaluation standards, thereby further enhancing the professional role of the valuation industry in safeguarding the rule-of-law environment and market order.

3 Strengthen practice supervision and improve the market environment. As the state continues to streamline administration and delegate power, the self-regulatory functions of social organizations such as industry associations will be further strengthened. One is To meet the new requirements of regulatory authorities regarding institutional qualification management and professional competence, we must study and develop new mechanisms and measures for self-regulatory oversight. The methods, tools, content, and focus of practice supervision should keep pace with the times, and we must strengthen our monitoring of emerging trends and potential issues in professional practice. Second is We need to improve the reporting of business information assessments, with a particular focus on strengthening the management of business reporting by securities qualification asset valuation agencies, enabling regulatory authorities to promptly obtain first-hand business data and stay abreast of market information. Third is We must improve and refine the regulatory system and mechanisms for professional practice, strengthen pre-emptive early warnings, in-process supervision, and post-event oversight of practicing professionals, and intensify both commendation and disciplinary measures in quality inspections of professional practice. Fourth is We must strengthen communication and coordination with relevant government regulatory authorities such as the Ministry of Finance and the China Securities Regulatory Commission. We should organically integrate administrative supervision with self-regulatory oversight to create synergy and foster a favorable market environment that encourages assessment agencies to practice in compliance with regulations.

4 Adapt to the needs of reform and innovate management models. The administrative approval reform, centered on streamlining administration and delegating power, will profoundly transform the management of professional qualifications and institutional oversight in the asset valuation industry. In line with the requirements of the government’s administrative system reform, the asset valuation industry must wholeheartedly promote reforms in its management approach and enhance the market-oriented management level of the valuation sector. One is We must firmly uphold and support the reform, correctly understand and interpret it, maintain the stability of the evaluation team, and ensure that the reform progresses smoothly and in an orderly manner. Second is In accordance with the requirements of reform and guided by innovative thinking, we must carry out top-level design, improve the qualification examination system for asset appraisers, select talented professionals for the industry, and ensure a smooth transition between the old and new examination systems. Third is We must innovate the self-regulatory management model, streamline the management chain among industry entry requirements, member management, institutional qualifications, practice supervision, standard-setting, and talent development, and establish a dynamic industry management system and mechanism. This will help create a new paradigm of industry management and services that is responsive to the demands of industry reform and fully meets the needs of industry development.

5 Promote evaluation legislation and strengthen the building of the rule of law. Establishing a legal compliance assessment industry is an important step in perfecting the market economy and enhancing the rule-of-law framework. It is particularly crucial for fostering a fairer, more unified, and open market environment, as well as for driving the transformation and upgrading of the asset valuation industry. One is We should work closely with the Legislative Affairs Commission of the National People's Congress and the Ministry of Finance to carry out the legislative assessment. In light of the current overall context of national reform and the specific requirements for reforming the qualification management system for asset appraisers, we should conduct thorough research on key issues in the appraisal legislation—including the management system, scope of business, management of appraisal institutions and appraisers, and legal responsibilities. We should also strengthen communication and coordination with the relevant regulatory authorities and associations involved in appraisal activities, and actively advance the legislative process for appraisal. Second is We need to intensify communication efforts in the revision of asset valuation-related laws, such as the Securities Law, and actively reflect industry demands in light of reform requirements and actual development conditions. Third is We must closely monitor the legislative process of laws related to property taxes and other relevant regulations, so as to better reflect and embody the role of valuation and safeguard the public interest.

6 Build a data platform and enhance information services. In the era of big data, whoever masters the data holds the upper hand and secures a competitive edge for the future. The level of informatization will play a crucial role in the future development of the asset valuation industry. Over the coming period, One is We must actively promote the development of informationization in the asset valuation industry. As the economy and society continue to develop, the industry grows stronger, and management approaches are adjusted, we should further strengthen research on the planning for industry-wide informationization, and continue to optimize and improve the top-level design for informationization in the asset valuation industry. Second is In alignment with reforms in industry management approaches and content, we should adopt new information technology frameworks and data standards, further enhance the existing industry management information platform, and promote the improvement of industry management capabilities. Third is We should continue to develop the database for the asset valuation industry and actively provide professional information services to support asset valuation practitioners. Guided by principles such as “overall design, phased implementation, unified management, collaborative application, moderate forward-looking approach, and emphasis on practicality,” while accelerating the construction of the foundational database, we should also proactively explore the establishment of a benchmark database for valuations, thereby creating a data platform for the asset valuation industry.

7 — Deepen international exchanges and enhance our international discourse power. First, ... We should proactively engage in international economic exchanges and cooperation, aligning with the “Going Global” strategy of Chinese enterprises. By creating a favorable policy environment, securing policy support, establishing service platforms, and strengthening the cultivation of internationally-minded talent, we can foster a sound institutional and policy framework, thereby promoting the “going global” and “internationalization” of China’s appraisal industry and enhancing its international image. Second is We must actively participate in the formulation of international assessment standards, enhance the Chinese assessment industry’s voice and influence, continuously improve the industry’s service capabilities, and ensure that the industry’s status is commensurate with China’s position as a major global economy. Third is We should support and participate in research on international assessment theories and major topics, conduct market research on assessments, and develop relevant guidelines, thereby providing references and lessons for professional innovation and industry development.

8 Strengthen team building and enhance personnel quality. We must align with the overarching trends of national reform and development, and in light of the new demands that socio-economic development places on industry talent, continuously intensify our efforts to innovate in talent cultivation. One is We need to integrate reforms in management practices with enhanced research on industry talent-development mechanisms, further refining the talent-development systems for asset valuation at three levels: the China Association of Asset Appraisers, local associations, and appraisal institutions. Moreover, we should intensify guidance and evaluation efforts aimed at nurturing talent within local associations and appraisal institutions. Second is We must strengthen the updating of industry professionals’ knowledge structures and the development of their professional competencies, in response to the special requirements of new markets and new business areas—including supporting reforms in the fiscal and tax systems, fostering the development of mixed-ownership economies, facilitating enterprise transformation and upgrading, and building a robust cultural market system. Third is We must earnestly implement the talent development plan that is tailored to different levels and categories, and organize training programs for high-end industry professionals, management personnel, faculty members, and key business specialists.