China: President Xi Jinping 'sees himself as emperor' says Baucus
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China stocks made a strong start today on hopes the United States might slow its aggressive interest rate rises. The optimism was partly offset by reports of new COVID-19 lockdowns in areas of the country.
China’s blue-chip CSI 300 Index rose 0.81 percent. The Shanghai Composite Index edged up 0.78 percent, closing slightly below the key 3,000 level, to 2,999.5.
Hong Kong’s Hang Seng Index rebounded one percent, ending a five-day losing streak, while the Hang Seng China Enterprises Index climbed 0.72 percent.
Asian shares rose today (October 26) on hopes the pace of global interest rate rises will soon start to slow.
The Hang Seng Tech Index rallied for a second day after a brutal sell off on Monday, gaining 2.5 percent.
Despite recent rallies, worries about China’s economy are still denting global sentiment.
Nick Payne, an emerging markets fund manager at Jupiter Asset Management, told Express.co.uk: “China has been in an 18-month long bear market and a pretty severe one. Confidence is pretty low.
“It stems from a slowdown in the economy caused by continuation of the zero-Covid policy. Flash lockdowns have hammered business and consumer confidence. There is also a property slowdown which is not helping. Property is about 20 percent of GDP.”
Mr Payne added that President Xi Jinping’s solidifying his grip on power by appointing a Standing Committee made up entirely of loyalists was also weighing heavily on sentiment as was renewed tensions between Washington and Beijing.
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US President Joe Biden’s administration published a sweeping set of export controls earlier this month, including a measure to cut China off from certain semiconductor chips made anywhere in the world with US equipment. The move represents a US bid to slow Beijing’s technological and military advances.
Mr Payne said: “Over the course of last week, [the Chinese Communist Party] made several big policy announcements. They repeated a commitment to doubling the size of their economy by the mid-2030s.
“To do that, the Chinese economy will need to grow at a four percent clip, but it’s difficult to see with the ongoing zero Covid policy and the changing of the guard of economic policy makers.”
The unveiling of Xi’s new leadership team rattled markets with Hong Kong stocks tumbling, Chinese stocks falling and the yuan weakening after the new line-up of China’s top governing body heightened fears Xi will double down on ideology-driven policies at the cost of growth.
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China’s economic tsar, Liu He, a US-trained economist seen as the brains behind earlier reforms, will be replaced by He Lifeng, another Xi acolyte.
The elevation of Li Qiang, who is now in line to succeed Li Keqiang as premier, surprised many policy insiders who pointed to the botched handling of a Shanghai COVID-19 outbreak which led to a two-month lockdown of its 25 million people, as well as his lack of experience in a national-level economic role.
China reported 1,407 new COVID-19 infections on Tuesday (October 25), of which 338 were symptomatic and 1,069 were asymptomatic, the National Health Commission said today.
As of yesterday, mainland China had confirmed 258,167 cases with symptoms. Financial hub Shanghai reported one symptomatic and 18 asymptomatic cases, compared with zero symptomatic and 19 asymptomatic cases a day before, the local health authority reported.
The southern technology hub of Shenzhen reported five new locally transmitted COVID-19 infections, versus four the day before.
Certain areas in several large cities including Shanghai and Wuhan, are reported to be under new partial lockdowns.
Mr Qiang will have the job of driving growth to fend off widespread job losses which could undermine social stability at a time when Xi is putting ever more emphasis on security.
In September, China’s surveyed urban jobless rate nudged up to 5.5 percent, the highest since June, as Covid curbs squeezed businesses. The unemployment rate for job seekers between 16 and 24 stood at 17.9 percent.
China is on track to miss its annual growth target of around 5.5 percent. A Reuters poll forecast 2022 growth at 3.2 percent. The poll showed China’s growth could pick up to 5.0 percent in 2023.
Xi’s Standing Committee choices disappointed investors who had been hoping he would keep some reform-minded officials, including former Guangdong party boss Wang Yang.
Alvin Tan, head of Asia FX Strategy at RBC Capital Markets in Singapore, said: “There is likely to be more deference to Xi Jinping’s own views about how to move the country and the economy forward.”
Mr Payne said: “China has been one of the few emerging economies which has actually emerged over the last 30 to 35 years. It achieved that through capitalism. It’s difficult to see a way forward with a more ideological Xi.”
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