Keys Of The XX Congress Of The Communist Party


The 20th Congress of the Communist Party of China (PCCh) ended this Saturday after a week of closed-door summits that mark the beginning of a new political cycle for the next five years, and in which there was talk of regulating the accumulation of wealth and to “adjust” “excess” income.

Although its burden is mainly political and ideological, the economy has also been present throughout the last few days. These are the most outstanding economic facts left by the conclave:

1.- “Quality” growth and technological “self-sufficiency”
The speech with which the leader of the PCCh and the country, Xi Jinping, kicked off Congress was not particularly surprising from an economic point of view, but it was reiterative of ideas that had already been brewing in recent months or years.

Given the slowdown in the economy, Xi stressed that the country should not try to achieve rapid growth at all costs but one of “high quality” , for which he called for an increase in national demand or to strengthen the safety of industrial chains. and supply.

The general secretary of the CCP also made up to six mentions of technological “self -sufficiency” , a term that did not appear in his speech during the 2017 Congress, which would show that it is now a priority issue in the framework of the trade war with the United States. States, which has expanded into other key areas such as semiconductors.

2.- “Regular” the accumulation of wealth?
Beyond the incipient slogan of “common prosperity”, one of the points in Xi’s speech that most caught the attention of experts was the promise to “regulate” the accumulation of wealth and “adjust” “excessive” income.

“It is the first time that we have heard him speak of a mechanism to regulate the accumulation of wealth. It is not clear what it will translate into in practice, but it could have great implications for the rich and for those who aspire to be rich,” they point out from Trivium China consultancy.

According to Trivium’s analysis, more details about this initiative will be known in the coming months, but “drastic actions” are not expected in the short term because the Party does not want to scare away ” potential creators of wealth and growth” in a time when the national economy is “in serious trouble”.

3.- China does not publish its GDP, but talks about recovery
On the 14th, the General Administration of Customs of the Asian country missed its announced appointment with the foreign trade data for September, which raised suspicions that were confirmed on Monday when, abruptly and without explanation, the National Statistics Office (ONE) indefinitely postponed the release of third quarter GDP data .

This set off alarm bells even though the outlook was positive (3.5% quarter-on-quarter growth after a 2.6% contraction between the first and second quarters), but the reason could be much more mundane: according to sources quoted by Bloomberg, the senior officials who must sign the authorization to publish the data were isolated by the anti-covid measures that surround Congress, making it impossible for them to access physical documents.

On the same Monday, the Prime Minister, Li Keqiang, wanted to clear up doubts by assuring that the Chinese economy is “trending upwards and recovering”, a message reiterated by the deputy director of the National Commission for Reform and Development, the main planning body economy of the country.

4.- State banks promise more support
The same day that the Congress started, after Xi announced more support for SMEs and the “real economy”, the country’s main state-owned banks published practically in unison statements in which they heeded the call.

The largest bank in the country and one of the largest in the world, ICBC, highlighted the 5 trillion yuan (690,000 million dollars, 706,000 million euros) that it has allocated to investments and new financing in the first three quarters, “helping stabilize the economy overall.

The entity promised to fulfill the “role as a pillar” that corresponds to it due to its size and to “further increase support for the real economy”, a promise that other heavyweights such as China Construction Bank also made, which advanced that “it will accelerate” the granting of new credits.

5.- The ‘covid zero’ is still in force
According to most analysts, the strict zero-tolerance policy with which China has faced the covid-19 pandemic has been one of the factors that has further weighed down a national economy that has already shown signs of slowing down in recent years.

However, neither Xi’s speech nor the appearances of the CCP spokespersons have hinted at a change in strategy, and the consulting firm Capital Economics already places its forecasts of a significant withdrawal of restrictions in 2024 due to the low vaccination rate among elderly, vulnerable to coronavirus.

Despite everything, there are some positive signs: the main Chinese airlines have already announced a timid resumption of some international routes, and some information suggested that Congress would have debated whether to reduce the mandatory quarantine upon arrival in the country from the current 10 days to 7. , an extreme that the authorities have not confirmed.

6.- No optimism in the stock markets
Chinese stock markets have suffered in recent times from the negative outlook for the Chinese economy and the aggressive rate hikes in the United States, which threaten not only investment in equities but also the valuation of the yuan against the dollar, which reached minimum levels since 2008.

The PCCh Congress has not been able to reverse the pessimism among investors, since, throughout the week, the Shanghai Stock Exchange lost 1.08% and the Shenzhen Stock Exchange, 1.82%; the CSI 300 index, which includes the 300 main companies in these two markets, fell 2.59%.

For its part, the benchmark for the Hong Kong parquet, the Hang Seng, fell 2.27% and ended the week at its lowest level since April 2009.