China: A Major Policy Error Is Now the Main Risk to China and the World

Economist, Centennial Asia Advisors

Jason Tan

Economist

Centennial Asia Advisors

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Economic Policy and Strategic Advisors

Macroeconomics

<ul><li>President Xi looks to be going from strength to strength – he has been declared as a “core leader” while actively taking out the opposition to further consolidate his political power.</li><li>The tacit understanding in China’s leadership succession is that power is rotated between the princelings and the <em>tuanpai</em>; however, Xi is looking to change this implicit rule. His moves to remove political adversaries are seen as paving the way for Xi allies to fill PSC positions in 2017 when five out of seven PSC members are slated for retirement.</li><li>Political risks are rising as vested interests clash. Given that much power is concentrated in the hands of Xi, he could be distracted from pressing economic matters by the politicking – a policy misstep could arise.</li></ul>

President Xi looks to be going from strength to strength – he has been declared as a “core leader” while actively taking out the opposition to further consolidate his political power.The tacit understanding in China’s leadership succession is that power is rotated between the princelings and the tuanpai; however, Xi is looking to change this implicit rule. His moves to remove political adversaries are seen as paving the way for Xi allies to fill PSC positions in 2017 when five out of seven PSC members are slated for retirement.Political risks are rising as vested interests clash. Given that much power is concentrated in the hands of Xi, he could be distracted from pressing economic matters by the politicking – a policy misstep could arise.

China: Xi's Aggressive Power Play Could Affect Policy at Critical Time