Li Qiang, likely to become the next prime minister, is pictured here while speaking at a major annual financial conference in Shanghai in 2020.
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BEIJING – Chinese stocks plunged on Monday on concerns that China’s new leadership “could be misunderstood”, consulting firm Teneo said.
Chinese stocks in Hong Kong and New York, especially internet tech giants like Alibaba, fell in the first trading day after the President of China Xi Jinping strengthen his grip on power with a The new core leadership team is filled with its loyalists.
Over the past few years, Mr. Xi has shown a preference for more state involvement in the economy.
“Despite having a close relationship with Xi, Li Qiang, Li Xi and Cai Qi all come in [Politburo standing committee] after targeting affluent provinces where economic growth remains a top priority,” Teneo CEO Gabriel Wildau and a team said in a note.
Xi .’s leadership team
The Politburo Standing Committee is the highest authority in China.
Li Xi led the export-rich Guangdong province as party secretary, while Cai Qi held the role for the capital Beijing.
Mr. Li [Qiang] has been widely regarded as a pro-market and pro-growth politician.
Ting Lu
China’s chief economist, Nomura
Li Qiang, likely to become the next prime minister, has overseen the strict Covid lockdowns in Shanghai this year in his role as the city’s party secretary.
However, analysts such as Nomura’s China Chief Economist Ting Lu point out that Li Qiang “has extensive experience in managing some of China’s richest and largest provincial economies” – Zhejiang, Jiangsu and Shanghai.
“Mr. Lee is widely regarded as a pro-market and pro-growth politician,” the Nomura report said.
“Mr. Li suffered some setbacks during the Omicron wave this spring, when the entire city of Shanghai was put under a full-limited embargo. However, for much of 2020 and 2021, Shanghai was under Mr. Lee’s governorship is seen as a model for striking the right balance between containment of Covid and economic growth.”
Analysts also pointed to the promotion of He Lifeng, head of the National Development and Reform Commission and head of the securities regulator Yi Huiman.
Teneo analysts said He Lifeng will “succeed Liu He’s retirement as deputy prime minister and director of the party’s Central Economic and Finance Commission”.
In our view, the completion of [party congress] will allow top leadership to move on to the next policy agenda soon – easing Covid curbs.
“Although he does not have Liu’s technical expertise, his record also shows a strong focus on economic growth,” the report said. “In an article last year, he wrote that economic development is ‘mission number one’ and is the foundation and key to solving all of our country’s problems.”
Xi’s speech at the opening ceremony of the 20th National Congress of the Communist Party of China this month stressed that China will focus on “high-quality development” and “modernization” in the coming years.
Shared prosperity – moderate wealth for all, rather than just a few – is a requirement for that modernization, Mr. Xi said.
Analysts say China’s renewed pursuit of shared prosperity has contributed to Beijing’s recent crackdown on internet tech giants.
Chinese officials have signaled that the crackdown is coming to an end. In July, a Politburo meeting said officials called for continued “healthy” development of the “platform economy” and “finalize” the adjustments of the business.
China’s Covid Policy
The party congress that ended over the weekend did not signal whether China’s strict Covid control measures will change anytime soon. Restrictions on business activity have weighed on economic growth.
However, Bank of America China and Asia economist Helen Qiao and a research team said in a note on Monday that Covid policy changes could happen sooner than markets expect.
“In our view, the completion of [party congress] will allow top leadership to move soon to the next policy agenda – easing Covid curbs,” the report said.
Some may worry about the new leadership’s lack of checks and balances, and the risk of policy blunders that shake up the economy, analysts say.
But they added that group solidarity “could lead to more effective policy implementation” for the country as a whole.
– Michael Bloom of CNBC contributed to this report.
