According to CCDI and local commissions for discipline inspection (CDIs) websites, a total of 98 bankers, financiers, and financial regulators have been investigated for corruption in 2019. These included high-profile names such as Liu Shiyu, former securities regulator chairman and Hu Huaibang, former chairman of China Development Bank – the largest policy bank in China. More people are taken down at the provincial level.
We think this time Hong Kong’s economy could get worse than that in 1998 but through a longer period. First, retail sales now account for a greater share of HK GDP today (17%) than 20 years ago (15%), and seems more vulnerable to this domestic instability. When the conflicts escalated in August retails sales shrank by 22.9% yoy, more than the biggest single-month drop in 1998 (21.5%). Hotel occupancy rate also fell to 63% in September, the lowest level on record, as tourists’ visits dropped by 35%. Second, the external environment is unfavorable given the unresolved US-China trade tensions, meaning that it will be difficult for Hong Kong exports to recover, especially if the protests erode Hong Kong’s connection with mainland China.
The Fourth Plenum of the Chinese Communist Party’s 19th Central Committee convened and concluded at the end of October 2019. This plenum gave more indications that President Xi will continue to serve after 2022. Facing a slowing economy and an unpredictable White House, the Party’s leaders pledged to modernize state governance and to carry forward Socialism with Chinese characteristics as China’s ruling ideology. In short, the Party is going to prove that it can reconcile governance dilemmas that other political systems cannot.
