China: Xi consolidates power via “Xi Jinping Thoughts” – ING

According to Iris Pang, Economist at ING, there were two things to note on the closing of the 19th Congress: First, Xi Jinping Thoughts is approved in the Party’s revised charter, which strongly suggests that Xi Jinping has consolidated his power and second, Wang Qishan is no longer a member of the Politburo Standing Committee.

Key Quotes

“Before today’s decision, Wang Qishan, who headed the Party’s Central Commission for Discipline and Inspection was seen as a special case not only because his role is at the centre of the anti-graft campaign but also because he could break the rules to let Xi stay in his ruling beyond 2020 even after he reaches the normal retirement age of 68.”

“We believe that “Xi Jinping New Era Thoughts” now represents the bible of the Communist Party, and this will allow Xi to implement political and economic reform even more easily going forward.”

“It is very clear to us that the anti-graft campaign will continue, which is positive to China’s long-term growth. The continuation of economic reform also means that deleveraging will continue.”

“In the medium term, that means material sectors would experience supply cuts ordered by local governments that only the largest company in the sectors could remain in business.”

“As expressed in the opening speech, technology will be the centre of economic growth in the coming 15 years, via consumption, education to military power.”

“For us it seems that concentration of power will facilitate faster and better reform results as we believe economic reform will run smoothly towards its targets. But it also risks that if the wrong decisions are made within the small group of people with absolute power, then it would put economic growth at risk. How quickly the government could correct any wrong decision will be critical to future growth.”

“On 25 October 2017, we will have a better sense of who will be the heir to Xi, if anyone.”