Transcript
More than two thousand senior CCP party members will gather in Beijing for several days starting October 16, 2022, for the 20th National Party Congress for a historical multi-day meeting.
What we know is that President Xi will be endorsed by the CCP members for at least a third five-year term and possibly, implicitly, a fourth five-year term.
Several senior CCP members will retire, including Premier Li Keqiang.
Premier Li, in recent months, has been the champion and the mouthpiece promoting stimulative financial policies and more relaxed regulations, particularly in regards to the property market. The conservative camp of the government, led by President Xi, has been silent. The most important signal that we wait to see from this Party Congress is whether the financial policies will be loose or tight.
Our guess is the former.
Policies will be increasingly supportive in order to alleviate the problem with liquidity in the property sector. Some individual property companies that have over-stretched themselves will likely be allowed to go into bankruptcy and not bailed out, but the entire sector will likely not be allowed to implode.
The Xi Administration also faces provocative pronouncements from the Biden Administration and the US Congress, regarding the US’ position on Taiwan. It will also be important to see if the Party Congress produces a different military and political stance.
Bottom line. Is Beijing an economic, political, and military hawk or a dove? Will they turn more hawkish or dial down on the rhetoric in an attempt to preserve economic prosperity and peace with the US? These are essential questions on which the market might get more clarity at the Party Congress.
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