Chinese President Xi Jinping waves after his speech after an inauguration ceremony for the city’s new leader and government in Hong Kong on July 1, 2022, on the 25th anniversary of the city’s handover from Britain to China.
Selim Chtayti | AFP | Getty Images
President Xi Jinping will face several major economic challenges from China after securing a widely anticipated unprecedented third term, according to veteran investor David Roche.
Roche said Xi would “most likely review” his confirmation as Chinese party leader at the next meeting of the National Congress, which would earn him another five-year term as leader of the country.
There will be no “real resistance against him at the top levels of the Communist Party”, he added at the Congress party meeting to be held later this year.
“It faces many challenges. Not only the external challenges of Taiwan, which is certainly not getting closer to China, but it faces the economic challenges,” said Roche, president and global strategist at Independent Strategy, at ” Squawk Box Asia” from CNBC. ” Thursday.
China’s economy is slowing with growth likely to be around 3% to 4%, he said, adding that it is “partly conditioned by legacy issues of debt and bad assets and partly conditioned by demographics and very low productivity.”
Chinese growth weakens
Goldman Sachs also lowered its forecast for the MSCI China index due to the worsening crisis in the Chinese housing market. The investment bank cut its earnings outlook for the index to zero growth for the year, from 4% previously.
Roche said China’s economy was struggling with “a huge real estate problem and banking problems”.
“You’ve seen it in people trying to get their deposit back. You see it in people who refuse to pay their mortgage, which goes against the very concept of common prosperity, which is [Xi’s] main ticket,” he added.
Xi launched the concept of “common prosperity” last year, which is generally understood as moderate wealth for all, rather than just a few. But it remains a vague and frequently used slogan.
Xi’s vision for the next term
On Wednesday, China’s state broadcaster CCTV reported that Xi made comments during a special two-day meeting in Beijing, where he outlined his vision for “the next five years”.
Xi reportedly said that the Chinese Communist Party congress meeting will come up with “a two-stage strategic plan for China’s drive to build a great modern socialist country in all respects, and will especially lay out plans for strategic missions and major measures over the next five years”. years.”
“Xi called for efforts to focus on tackling unbalanced and inadequate development, and working on new ideas and measures to solve the problems,” the broadcaster said.
There’s no doubt that Xi will be confirmed, Roche said, “but if he wants to finish his term, he has to make real progress on … social peace. And I think that’s a big, big challenge.”