Cascade Effect of Xi’s Historic Reelection
The Chinese Communist Party’s 20th Party Congress was held for one week starting on October 16 with 2.300 delegates from across China who assembled in Tiananmen Square’s Great Hall of the People, Beijing, China. The congress agenda includes reviewing last term’s progress, setting out its domestic and foreign policy goals, and deciding the next leader to serve the nation. However, history was made in China after it was announced that President Xi Jinping will remain in power – breaking decades-long precedent that limits the terms of Chinese leaders. The CCP also named a seven-member Politburo Standing Committee (PSC) led by Xi with its inner sanctum of power dominated by his allies, cementing his position as the nation's most powerful leader. The new standing committee was revealed as President Xi led them on stage in rank order. His leadership of the procession served as the confirmation he will remain as the general secretary of the party. This was made possible because in 2018, Xi successfully removed the two-term limit from the constitution. Furthermore, Xi’s predecessor, Hu Jintao was forcibly escorted out from the congress indicating a strong political move by Xi, paving way for the consolidation of his power. Despite the positive reforms that he has brought to the country during his time in office, many are worried about his vision for the future of the country and possibly harsh policies. President Xi has also centralized much of the power within the state and the party under his control, he has purged rivals and stifled dissent. People in China are under increasingly heavy surveillance and censorship, while journalists, lawyers and civil society groups have largely been silenced.
After President Xi Jinping stacked the most powerful decision-making body with his key allies and secured a third term in office, US-listed Chinese companies stocks tumbled on Monday (10/24) by 25% as losses to the tune of over US$1 trillion (Rp15.000 trillion) continue to mount for the firms. The turmoil happened due to his tightening grip on government during his unprecedented third term that would stifle the economy and private enterprise. China’s Nasdaq Golden Dragon index, made up of 65 Chinese stocks, fell 15%, losing about US$89 billion in market value. Moreover, the ten biggest New York-listed Chinese companies lost US$67.7 billion in market capitalization. One of the largest Internet companies, Alibaba Group Holding Ltd, lost 13%, while the technology company Pinduoduo fell by 25%. Losses were felt in China as well, as the Hang Seng China Enterprises Index, which measures Hong Kong-listed Chinese stocks, fell 6.4% on Monday (10/24), and the Chinese yuan fell to a low of 7.23 per US dollar in offshore trading, the weakest since the global financial crisis in 2008. With an ongoing emphasis on security, regulating the housing market, and promoting shared prosperity, China's market decline has disappointed investors looking for signs of regulatory easing. Furthermore, President Xi‘s strict Covid-Zero policy in China could aggravate its economic growth and stock market performance. Despite the turmoil, Xi would continue to place development as top priority and wants the country to embark on a trajectory of high-quality growth as part of its national rejuvenation, achieving higher standards of living towards advanced technologies.
Being the world’s second-largest economy, Xi’s historic reelection has brought cascade effects to other parts of the sphere. With an already-tightened control of his country, he now aims to increase the superpower’s influence abroad through its economic heft. Concerns over the currently-happening territorial claims and geopolitical issues in Hong Kong, Taiwan, and India have grown even higher. The public fears an all-out invasion towards said countries, stimulated by Russia’s precedent annexation of Ukraine. China is also known for using brute force through its strong military, which opens up critics for possible human rights violations. Furthermore, Xi showed no plans to adjust the severe zero-COVID strategy that has frustrated China’s public and disrupted business, trade, and supply chains worldwide. He called for more self-reliance in technology, faster military development, and protection of Beijing’s “core interests” abroad. He also announced no changes in policies that have strained relations with Washington and Asian neighbors. Certainly, from sharpening socioeconomic policies to the advancement of governance during his decade in ruling the country, Xi Jinping has brought apparent growth to the table. With his firm ambitions to drive China to become the world’s next superpower, he will, beyond any doubt, continue to pursue his agendas in more audacious ways in years to come.
Wall Street Journal
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