Li Qiang, who is likely to become the next premier, is pictured here speaking at a major annual financial conference in Shanghai in 2020.
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BEIJING – Chinese shares plunged on Monday on fears China’s new leadership team “may be misunderstood”[ads1];, consultancy Teneo said.
Chinese shares in Hong Kong and New York, especially internet technology giants such as Ali Babafell on the first day of trading after Chinese President Xi Jinping cemented his firm grip on power with a new core leadership team filled with his loyalists.
In recent years, Xi has shown a preference for greater state involvement in the economy.
“Despite being close to Xi, Li Qiang, Li Xi and Cai Qi all come in [Politburo standing committee] after traveling up rich provinces where economic growth remains the top priority,” Teneo CEO Gabriel Wildau and a team said in a note.
Xi’s leadership team
The Politburo Standing Committee is the highest power circle in China.
Li Xi has led the export-heavy province of Guangdong as party secretary, while Cai Qi had the role for the capital Beijing.
Li Qiang, who is likely to become the next premier, oversaw strict Covid lockdowns in Shanghai this year in his role as party secretary in the city.
However, analysts such as Nomura’s Chief China Economist Ting Lu pointed out that Li Qiang “has extensive experience managing some of China’s richest and largest provincial economies” – Zhejiang, Jiangsu and Shanghai.
“Li has been regarded as a capable pro-market and pro-growth politician,” the Nomura report said.
“Mr Li suffered some setbacks during the Omicron wave in the spring of this year, when the entire city of Shanghai was put under a restrictive full lockdown. However, under Mr Li’s governorship, Shanghai was seen as a model for most of 2020 and 2021. to achieve a reasonable balance between Covid containment and economic growth.”
Analysts also pointed to the promotions of He Lifeng, head of the National Development and Reform Commission, and securities regulator chief Yi Huiman.
He Lifeng is likely to “succeed the outgoing Liu He as vice premier and director of the party’s Central Finance and Economic Commission,” Teneo analysts said.
“While he lacks Liu’s technocratic expertise, his record also suggests a strong focus on economic growth,” the report said. “In an article last year, he wrote that economic development was ‘task number one’ and the foundation and key to solving all the country’s problems.'”
Xi’s speech at the opening of the Chinese Communist Party’s 20th National Congress this month stressed that China will focus on “high-quality development” and “modernization” in the coming years.
Shared prosperity — moderate wealth for all, rather than just a few — is a requirement for that modernization, Xi said.
Analysts have said China’s renewed pursuit of shared prosperity contributed to Beijing’s recent crackdown on internet technology giants.
Chinese authorities have signaled that the crackdown is nearing its end. In July, a readout of a Politburo meeting said officials called for continued “healthy” development of the “platform economy” and “complete” the businesses’ adjustments.
China’s Covid policy
The party congress that ended at the weekend did not signal whether China’s strict Covid controls would be changed soon. The restrictions on commercial activities have weighed on economic growth.
However, Bank of America China and Asia economist Helen Qiao and team said in a note on Monday that changes in Covid policy could happen faster than the market expects.
“In our view, completion is off [party congress] will enable senior management to move on to the next policy agenda soon – easing the Covid curbs, the report says.
The analysts said some may worry about the new group of leaders’ lack of checks and balances, and the risk of policy mistakes that shock the economy.
But they added that the group’s solidarity “could lead to more effective policy execution” for the country overall.
— CNBC’s Michael Bloom contributed to this report.