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Xi Jinping has started his historic third term as Chinese leader by crashing the stock market, wiping tens of billions from the value of leading companies in recent days.
Stocks in Hong Kong, Shangahi and Shenzhen all fell this week after Xi took another five years in power and used it to tighten his grip on the country.
About $70 billion was also wiped from the value of Chinese companies listed abroad as foreign investors fled in the face of Xi’s increasingly authoritarian plans for the Chinese economy.
It comes after he stripped top economists and pundits of positions of power and instead filled the posts with loyalists, with analysts saying it appears he is willing to stunt China’s growth, provided it gives it more power.
Xi Jinping began his third term in office by overseeing a sell-off in China’s stock markets as foreign investors resisted his increasingly authoritarian rule
Charles Parton, a former British diplomat now with the Council on Geostrategy, told MailOnline: ‘Xi put much more emphasis on the party than on the economy.
What Xi believes in is an economic model in which he relies on the state sector and the private sector is controlled by the party.
“He finds that essential, and if he reforms, he loses control.
“With economics comes money, and with money comes power, and only the Communist Party gets power.”
Hong Kong’s Hang Seng index, which is dominated by mainland Chinese companies, fell more than 6 percent on Monday after Xi passed his third term.
It means the index is now down more than a third since the start of the year and is the worst performing in the world.
Shares also fell in mainland China’s mainland financial centers Shanghai and Shenzhen, as markets refused Xi’s push for control.
Hong Kong’s Hang Seng index fell particularly sharply on Monday as Xi entered his third term, and is now the world’s worst-performing index in 2022
Shanghai’s market also fell as Xi stripped his top team of economists and experts and replaced them with hardliners and ideologues
Shenzhen’s stock market also fell sharply after Xi’s term began before recovering, but remains below where it was before taking another five years in power
The Leninist leader this weekend outlined his vision for the next five years, promising to protect China from what he sees as an increasingly hostile world, while indoctrinating every sector of society — including business — into “Xi Jinping thought.”
He also announced a new Politburo standing committee — six men who will help him run the country — which he is stacking with ideologues perceived as lacking in expertise and experience.
Li Qiang was brought in as a new prime minister, the former Shanghai leader who oversaw a zero-Covid lockdown of the city that ravaged its markets and brought misery to millions of citizens.
He replaces Li Keqiang, a more moderate politician who had called for “every means possible” to help recover China’s pandemic-stricken economy.
Yi Gang, the governor of China’s central bank, was also expelled from the Central Committee, sparking rumors that he could resign or be forced to be removed from office.
Xi’s third term appears to include tighter control of the economy and better protection of markets from outside influences, which has deterred investors (file image, Shanghai)
Daniel Rosen, an economic policy expert at the CSIS think tank, said China faces several major and growing economic crises and the party congress has failed to address them.
While admitting that “in normal times” is not the job of Congress, he argued, “These are not normal times.”
He added: “The short-term view is that no one feels better about the growth prospects in China.
“The medium and long-term outlook – I think we’re seeing a range of structural, systemic economic problems.
“The good thing about Xi’s first two terms is that he showed that he understood these issues and had plans to address them.
“But there’s no indication that he understands the new problems well enough to get around them.”
His new team seems unable to implement tax reforms, clean up the banking sector and reshape stock markets. These problems were simply not addressed adequately [at Party Congress].’