No ‘Adults in the Room’: Xi Jinping Catches Global Investors Off Guard (FT)
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Exclusion of moderates from China’s leadership spurs record stock outflows
Analysts and fund managers had expected Xi to balance his seven-man leadership team by including at least a couple of moderates. Instead, it became clear that he had taken sole charge of the world’s second-largest economy. “Investors were imagining a scenario where Xi basically got his own way, but there would still be some adults in the room with some kind of pro-market pushback,” said Thomas Gatley, an analyst at Gavekal Dragonomics in Beijing.
Gatley at Gavekal pointed to China’s education industry as an example of what can happen when there is no pushback against punitive policymaking.
One fund manager who divides his time between the US and Asia said he would no longer invest in any Chinese companies after the party revealed its new leadership line-up. “[Xi] purged all the competent people who knew about how to grow the economy with a bunch of puppets,” the fund manager said. “I think there were still people who were hoping that this was just a cyclical phase to ensure his third term, but the purge fully demonstrated this is a permanent ideological shift, and there’s no turning back.”READ MORE
