Chinese politics and financial sector reform
Special points to highlight in this issue:
• While in many ways it seems that Xi Jinping will be able to emerge from this year’s Party Congress having placed allies in many of the key positions, including in the all-important Standing Committee, the recent stepping-up of what seems to be a concerted attack on Wang Qishan, the president’s right-hand man in the anti-corruption campaign, is starting to create real worry among many within China. It is too early to say how seriously to take these attacks.
• Regulators seem more determined than ever to get credit under control, but we cannot ignore the political dimension. Getting credit under control will mean that GDP growth will drop by more than half from current levels.
• This can only happen if Beijing can absorb the political consequences of much slower growth and can implement against vested-interest opposition the liquidation of local government assets to cover unrecorded losses, debt-servicing costs, and the rising household wealth needed to keep growth in a rebalancing economy from collapsing.
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