Li Qiang, likely to become the next prime minister, is speaking at a major annual financial conference in Shanghai in 2020.
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BEIJING—Monday’s plunge in Chinese stocks “may be misplaced” by concerns about China’s new leadership team, consulting firm Teneo said.
Chinese stocks in Hong Kong and New York, especially internet tech giants like Alibabafell on the first trading day after Chinese President Xi Jinping cemented a firm grip on power with a new core leadership team filled with his supporters.
In recent years, Xi has wanted more involvement in the state’s economy.
“Despite their close relationship with Xi Jinping, Li Qiang, Li Xi and Cai Qi all [Politburo standing committee] After leading a prosperous state where economic growth remains a top priority,” Teneo managing director Gabriel Wildau and team said in a note.
Xi leadership team
The Politburo Standing Committee is the highest circle of power in China.
Li Xi was head of the export-rich Guangdong Province as party secretary, and Cai Qi was in charge of the capital, Beijing.
Likely to become the next prime minister, Li Qiang oversaw a strict Covid lockdown this year as party secretary for the city of Shanghai.
But analysts such as Nomura’s chief China economist Ting Lu said Li Qiang “has extensive experience managing some of China’s richest and largest regional economies, Zhejiang, Jiangsu and Shanghai. there is,” he pointed out.
“Mr. Lee has been widely recognized as a capable market and growth-promoting politician,” the Nomura report said.
“Li said he experienced some setbacks during the Omicron wave when the entire city of Shanghai was placed under a limited full lockdown this spring. Meanwhile, Shanghai under Li’s governor will achieve a reasonable balance between containing Covid and growing the economy.
Analysts also pointed to the promotion of National Development and Reform Commission Chairman He Lineng and the head of the securities regulator Yi Huiman.
Teneo analysts said He Lifeng “is likely to succeed the outgoing Liu He as deputy prime minister and chairman of the Central Finance and Economic Commission.”
“Although he lacks Liu’s expertise, his record also suggests a focus on economic growth,” the report said. “In an article last year, he wrote that economic development was the ‘top challenge’, the foundation and key to solving all our problems.”
Xi’s speech at the opening ceremony of this month’s 20th National Congress of the Communist Party of China emphasized that China will focus on “quality development” and “modernization” in the coming years.
Common prosperity, that is, bringing moderate wealth to all, not just the few, is a requirement for that modernization, Xi said.
Analysts say China’s renewed quest for co-prosperity has contributed to the government’s recent crackdown on internet technology giants.
Chinese officials have suggested the crackdown is nearing an end. Officials called for the “sound” development of the “platform economy” to continue and the company’s adjustments to be “completed,” according to materials from the Politburo meeting in July.
Covid policy in China
The party convention, which ended over the weekend, did not indicate whether China’s draconian coronavirus measures would change anytime soon. Restrictions on business activity are weighing on economic growth.
But Bank of America China and Asia economist Helen Zhao and her team said in a note Monday that coronavirus policy changes could come sooner than markets expected.
“In our opinion, [party congress] Top leaders will soon be able to move on to their next policy challenge — easing restrictions on COVID-19.
Analysts said some might worry about the new leadership group’s lack of checks and balances and the risk of a policy mistake that would shock the economy.
But they added that group solidarity “could lead to more effective policy enforcement” across the country.
— CNBC’s Michael Bloom contributed to this report.