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SOE senior leadership changes

Notably, Mao Weiming, Zhang Yuzhuo, and Dai Houliang are all Central Committee alternate members. While SOE managers are no longer included in the 205-member Central Committee as full members, those who are among the 171 alternate members are certainly of a higher political status than their peers not in the Central Committee. Mao’s appointment to the State Grid, as well as Zhang’s appointment to Sinopec and Dai’s appointment to CNPC therefore indicate that these three SOEs are of higher political importance than others.

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In Plenum Notes, Politics and Policy

How China Became More Centralized

Xi has achieved a more effective central leadership and a clear-cut decision-making process. Ambitious policy initiatives such as financial de-risking and cutting industrial capacities were carried out forcefully and rapidly. But at the same time, as local officials become wary of potential wrongdoings, the centralization process has also caused inertia across local governments, resulting in potential risks in policy implementation.

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In Markets and Finance, Plenum Notes

Bracing the Mini-rebound

China’s economy looks fine from a cyclical perspective, as data released last Friday suggest. Real GDP growth stabilized at 6% in Q4 2019, ending five consecutive quarters of deceleration, and most monthly indicators beat expectations in December. The continued recovery of automobile, electronic equipment and external demand will offer the tailwind through the next couple of quarters.

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In Plenum Notes, U.S.-China

Phase-one Deal and Beyond

For the United States, the major gain is China’s commitment to purchase more American goods. Based on the agreement, the annual export of goods and services from the US to China should increase to $263bn in 2020 and $310bn in 2021, and 80% of the increase would come from goods.

For the United States, the major gain is China’s commitment to purchase more American goods. Based on the agreement, the annual export of goods and services from the US to China should increase to $263bn in 2020 and $310bn in 2021, and 80% of the increase would come from goods.

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In Markets and Finance, Plenum Notes

Recapitalizing Chinese Banks

China’s financial regulators keep reiterating that raising capital is a top task for banks, especially the medium and small ones. This is necessary partly because Chinese banks need more capital to support its 12-13% loan growth, and partly because the People’s Bank of China (PBOC) wants to avoid more bank failures after bailing out three medium banks in 2019. The large scale of capital raising is positive from a cyclical perspective as it removes a key constraint for banks to lend more, but the downside is that some capital instruments are cross held.

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In Plenum Notes, Politics and Policy

Top 10 Political Scandals of 2019

As the new year is just around the corner, we decided to present something a little bit light in today’s note – China’s top 10 political scandals of 2019. While not all of them are market movers, these cases do demonstrate the scope, depth, and implications of Beijing’s anti-corruption campaign, which shapes policy outcomes at both local and central levels.

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