After the 20th National Congress of the Communist Party of China (CPP), all major stock markets fell sharply, reflecting the market’s panic over the future situation in the country. Now, foreign capital is withdrawing from the Chinese market at record speed, and rich and wealthy people have started fleeing the mainland. So, why are investors so bearish on China’s future prospects?
“Xi Faction” is in total control of the “Power” as the new members of the Standing Committee of the Political Bureau of the Communist Party of China and the Central Military Commission belong to the Xi faction. Almost all the seven members of the Politburo Standing Committee are his own family members. At the same time, the opposing “Tuan Faction”, which is more inclined to continue market ‘reform and opening up’, has been completely “wiped out” and defeated.
The economic policies implemented by the Xi Jinping administration over the past few years have caused severe damage to the Chinese economy. This naturally makes investors worried that Xi Jinping’s tightening of power would mean that policies such as “zero epidemic prevention”, “common prosperity”, and suppression of the private sector will continue, and there will be no other factions in the party. Under the checks and balances, China’s risk of future policy mistakes is rising sharply.
On the other hand, the lack of senior officials in the party’s new leadership who support market reforms and economic opening has disappointed foreign investors and the domestic business community. Not only Premier Li Keqiang is out, but Wang Yang, who is regarded as a reformer, and Hu Chunhua, the Vice-Premier in charge of trade and foreign investment, have also been squeezed out of the Politburo Standing Committee. In addition, Vice Premier Liu He of the Communist Party of China, Yi Gang, Governor of the Central Bank, Liu Kun, Minister of Finance, and Guo Shuqing, Chairman of the China Banking and Insurance Regulatory Commission, will also step down from the leadership.
Among the new Politburo Standing Committee members, there are no technocrats who understand the economy, no qualifications, no political achievements, and only one thing in common. They are all followers of Xi Jinping. For example, Li Qiang, Cai Qi, and Li Xi, who are new members, are all local party committee secretaries; Ding Xuexiang is the director of the Central Office and Xi Jinping’s “general manager”; the remaining Zhao Leji is the secretary of the Disciplinary Committee, responsible for investigating “corruption” within the CCP. and infidelity; Wang Huning is the CCP’s penman, who is called “the most dangerous person in the world” and will be in charge of the CCP’s ideology.
Disillusioned wealthy Chinese are fleeing.
Xi Jinping announced in the report of the 20th National Congress that the next step will lead the people to “common prosperity”, and for the first time, proposed the so-called “regularised wealth accumulation system”. The CCP media also highlighted the existence of wealth accumulation among a few groups who got rich first and who became rich. The means are not standardised. In this regard, some economists believe that Xi Jinping may be mulling a plan to increase taxes on the rich, perhaps to readjust wealth through the way he has been talking about rising real estate taxes, which may be launched soon as next year.
Therefore, just after the closing of the 20th National Congress of the Communist Party of China and Xi’s Army’s full power, foreign capital withdrew from the Chinese market on a large scale, and the wealthy Chinese also launched plans to flee.
According to the British “Financial Times” report on the 25th, an immigration lawyer mentioned that he has received “start-up” instructions from three ultra-high net worth Chinese business families to implement their escape plan.
The report also mentioned that immigration companies in Shanghai and Beijing had reported a surge in the number of people applying for US green cards with “special talents” because the program has a shorter processing time than the investment-based green cards commonly used by the ultra-rich. In addition to the rich elites launching their flight plans, wealthy people and Taiwanese businessmen also sell their assets and prepare to escape from China.
Radio Free Asia quoted a Shanghai real estate industry insider, who said, “the dust of the Plenary Session has settled, and everyone has no illusions. Some luxury houses in Shanghai have fallen by about 40 per cent of the market price, and some people are selling them. A large number of luxury houses are sold. It is 30 to 40 per cent lower than the market price, and I’m thinking about running away, but it’s too late to sell”.
With Foreign capital retreating and the rich fleeing, Xi’s Army has fully ascended to carry out “common prosperity” that marks the end of “reform and opening up”, reflecting the market’s panic over the future situation in China.