China: Why the Party Congress is key for road ahead? – Danske Bank

Chief Analyst, Allan von Mehren at Danske Bank suggests that the key focus of the 19th National Congress of the Communist Party that starts on 18 October will be whether President Xi Jinping strengthens his power even more by putting mainly his ‘own’ people into the Standing Committee of the Politburo – the top leadership of China.

Key Quotes

“Another key focus will be what happens on the other side of the Congress on economic reforms. Will implementation get a new push? Or will it continue to lag, with the risk of China running into severe problems down the road?” 

“We are cautiously optimistic that Xi Jinping will find a middle road and not strengthen his power so much that it creates a backlash at a later stage. We also see a good chance that reform implementation moves up the agenda next year following his first term in which Xi has focused on politics and his power base.”

“Nevertheless, continued focus on deleveraging and the cooling of the housing market is set to lead to a slowdown in China over the next year. However, what happens after that depends a lot on how China moves on reform and financial risks.”