President Xi Jinping is expected to unveil a new economic framework for the country after the “The Third Plenum” (simply the third time that Xi Jinping will meet with his top brass in his role as the party chairman) wrapping up on the 12th.
Traditionally reforms are expected at the Third Plenum, with new leaders having had time to consolidate power. A senior Chinese official has already promised “unprecedented” reforms.
Xi Jinping is under tremendous pressure from many parts of Chinese society to unveil radical changes so – alot rides on the outcome.
We all know how significant a role China currently plays on the world stage with respect to it’s economic importance and influence on the U.S.A. Large reforms in the banking sector or increased suggestion of “tightening” can and “will” have significant impact on global markets so…..whatever you “think” you hear next week on CNN don’t be fooled.
China will move the markets, as continued coverage of “locker room bullying” takes a back seat.
Shoot me now, as I’m not sure if I can hang on another day. CNN has the “battle of the burgers” and “locker room bullying” rounding out the top stories of the day.
There’s little doubt in my mind that they will introduce reforms in the banking sector, but they can’t afford to “tighten” up lending, because it puts about 30 million jobs at immediate risk, not to mention what the loss of exports would do to their balance Balance of payments.
The elephant in the front yard is of course all the empty city’s that they have built over recent years… something has to be done to move people out of rural area’s into these cities, and that means creating 50 to 100 million new jobs somehow.
The other massive problem the Chinese have is in a Agricultural sector. They have to upgrade rural transport systems to get get food to the markets in the cities a lot more efficiently (up to 25% of all fruit and vegetables rot before reaching markets). The building of massive highway and railway systems may be the next “growth” area for government spending (more iron ore leaving Australia).
The other reform needed in rural area’s is somehow increasing corporate farming practices (modern large scale equipment etc) as subsistance farmers move to the cities. Much of China’s agricultural industry still operates on family run holdings… much like Australia and America was 50 to 100 years ago, and this needs to change.
All in all I think that given the above we will still see full steam ahead, but in a different way to what we’ve seen in the last 5 years.
Incredible Ezfx.
You’ve got some serious insight and a valuable perspective.
Obviously I can’t comment on what reforms are what and how they will affect the people, only to say that I am pleased to see things moving in the right direction.
It’s interesting that….the more travel and culture I see on t.v continues to show the rise of China’s economy and people etc….I see happy children doing exercises and singing the nation songs etc…..
Then I see well………Detroit.
It’s a truly amazing time we live in…seeing such polar shifts in the global scales of balance.
Definitely leaning toward tightening in my opinion
Discussions of liberalising the capital account, rewarding Chinese savers, sustainable growth in property market do not scream of huge inflationary action
On a much light note……
China needs to get a team of UFC fighters trained up.
I think that would likely satisfy most, who really don’t get into all the numbers and speculation etc……
Just boil er down to a good ol scrap and lettem go at it.
We hear one thing today..then the opposite tomorrow with respect to what’s “really going on” with China’s economy – the numbers etc….a hard fast opinion either way is pretty tough to land.
As it affects me and my trading I’ve got China at the absolute tippy tippy top of the pyramid so…..opinion or not – as China goes……I go.
Personally……when a country is throwing around GDP numbers of 7 – 8 % compared to the negative growth shit storm of The U.S…….I don’t really see what else there is to say.
China is off the chain, and coming into its own at an incredible pace with long term plans, focus, maturity and restraint ( considering what they “could do” ).
Haters ans skeptics need to get their heads out of the sand….
China is coming soon…….to a theatre near you.
Haha awesome thought. UFC it is!
Ya the China story is amazing and as it ‘liberalises’ under good leadership, urbanizes (if I can make up another word), it makes for a great long term growth story.
A short period of consolidation and gentle restructuring kinda seems fitting though to me right now.