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SinoInsight 1
The Central Committee held its annual Central Economic Work Conference in Beijing from Dec. 18 to Dec. 20. The conference expanded on the economic portion of Xi Jinping’s 19th Party Congress report, with an emphasis on supply-side structural reform and the prevention of financial risks.
OUR TAKE
Like the National Financial Work Conference in July, the December economic conference was appeared to be a high-profile affair given the officials in attendance:
- The Politburo and its Standing Committee
- Secretariat of the Chinese Communist Party
- The National People’s Congress Standing Committee
- State Council members (including all vice premiers)
- Heads of the Supreme People’s Court and Supreme People’s Procuratorate
- The National Committee of the Chinese People’s Political Consultative Conference
- Central Military Commission members
- Senior officials from the central and provincial state and Party organs
- Leading industrial and financial regulators
- Senior officials from the military and the People’s Armed Police
The composition of the conference attendees suggests that Beijing is wary of future financial risks and is preparing for the worst. In the event of a financial crisis, Beijing will likely mobilize the military and the security and legal apparatus to ensure “economic stability.”
SinoInsight 2
Since the end of the 19th Party Congress in October, 17 vice ministerial-level officials in 13 provinces received new appointments. Ten of the officials were transferred to other provinces, four of them received promotions, while an official from the central ministries was dispatched to the provinces.
OUR TAKE
Despite having his name written into the Chinese Communist Party’s constitution (a move that puts him at least on shoulder with Deng Xiaoping in terms of authority), Xi Jinping still doesn’t have absolute power. Officials across China continue to oppose Xi, as securities regulator Liu Shiyu signaled at the 19th Congress in identifying the recently purged former Politburo member Sun Zhengcai and others as “usurpers.”
Xi will likely continue to carry out large-scale official reshuffling on a regular basis. Shuffling officials around prevents them from establishing power networks if they stay in one area for too long, and also allows Xi to better gauge the loyalty of officials.
SinoInsight 3
In November, 56 of 533 Chinese banks subsidiaries surveyed by mobile financial platform Rong 360 stopped issuing mortgage loans after claiming to have reached their loan quota and among various other reasons.
OUR TAKE
Over 90 percent of China’s housing loans are issued by five national banks. Although banks across China are continuing to provide loans, the volume of loans being issued has fallen in recent months, particularly in first-tier cities, and housing loan limits have noticeably tightened. The Trump administration’s financial policies and a new national security strategy with a focus on economic defense will likely result in more capital outflows from China and lead to a further squeeze on the property bubble.
The Trump administration’s financial policies and a new national security strategy with a focus on economic defense will likely result in more capital outflows from China and lead to a further squeeze on the property bubble.
