Commentary
Financial markets have shown disapproval of Xi Jinping’s success in securing a third term as China’s leader. Stocks, bonds, and China’s currency, the yuan, all fell with the close of the Party Congress and have more or less stayed down. The reaction is certainly understandable. For some time now, Xi has shown a penchant for policies that can only be described as anti-growth. His continuation in power can only mean more of the same.
There was, however, one surprise in the market response. It announced that investors strangely had not yet fully adjusted to a Xi-dominated future. They should have. Xi has long telegraphed his policies and intention to get a third term. Perhaps there was a lingering hope that reformers would retain power, and when at the end of the Party Congress it was clear that only Xi’s allies would have positions of power, that hope was shattered. But then, given Xi’s behavior for some time, even that result was entirely predictable….