Monday, October 2, 2017

How American policy could tank China

As China approaches its 19th Party Congress, there has been no shortage of analysis about what to watch for. Here are a couple of examples worth reading:
  • The meeting that could seal Xi's grip on China (Bloomberg)
  • Beijing's Game of Thrones: Signaling loyalty before the Party Congress (China Focus)
Of particular importance is the Reuters report that the Party plans to amend its constitution at the Party Congress as a sign that Xi Jinping is tightening his iron grip:
China’s ruling Communist Party is expected to amend its constitution at a key party congress next month, state media said on Monday, in a sign that President Xi Jinping aims to enshrine his guiding ideological doctrine in the charter.

Since assuming office almost five years ago, Xi has rapidly consolidated power, with moves such as heading a group leading economic reform and appointing himself military commander-in-chief, although as head of the Central Military Commission he already controls the armed forces.

The Politburo, one of the party’s elite ruling bodies, deliberated a draft amendment to the constitution to be discussed at the congress that would include “major theoretical viewpoints and major strategic thought”, the official Xinhua news agency said.
For investors, the main focus is how China plans to continue its objective of rebalancing growth from the old credit driven infrastructure building model to an economy based on household consumption. As the IMF recently noted, some progress has been made, but the transition has been slow.

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