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naraburns  nihil supernum  1yr ago (text post)   36173 thread views

Culture War Roundup for the week of October 24, 2022

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The big story today: Xi Jinping secures historic third term as leader of China

The Communist Party leader broke with the traditional two-term limit, extending his authoritarian rule over the world’s second-largest economy.

HONG KONG — Xi Jinping secured a historic third term as the leader of China on Sunday, cementing his status as the country’s most powerful figure in decades and extending his authoritarian rule over the world’s second-largest economy.

Xi’s third five-year term became official when he was the first to walk out onstage at the Great Hall of the People in Beijing, where a twice-a-decade congress of the ruling Chinese Communist Party wrapped up Saturday. He was followed in descending order of rank by the six other members of the new Politburo Standing Committee, China’s top leadership body.

Chinese stocks are falling hard on this news, down 10% or more. Is the prelude to something worse, or will China recover?

Of course, the media has its priorities right:

In his speech opening the party congress on Oct. 16, Xi said he remained “committed to the fundamental national policy of gender equality.” But only 11 of the new Central Committee’s 205 members are women, and there is not a single woman in the new 24-member Politburo. (The previous Politburo’s only female member, Sun Chunlan, retired at 72.)

The second largest economy in the world may be in economic and political crisis, but are there enough women in power?

Chinese stocks are falling hard on this news, down 10% or more.

I'm not as informed on China as I ought to be, but wasn't this long priced in? It seems bizarre to me that market actors with enough skin in the game to impact stock prices expected anything else. Am I off base here?

Western PRC watchers and analysts in general didn't expect Xi to full sweep the standing comittee with loyalists, instead of allowing some (rival/CYL) reformists to stick around. They're now pricing in Xi/PRC going more autarkic than with a few reformers on board that sectors that had been targeted (big tech) will continue to be targeted), that zero-covid will stick around. Western MSM coverage of HK/SH crashing and foreign outflows overlooks that domestic strategic industries like defense increased. I think AVIC hit 10% daily limit. Just like how wages and employment in PRC hard tech and strategic sectors increased while soft / consumer tech tanked. The TLDR is Xi is going to keep boosting strategic indigenous industries, even if it means slapping others to free up talent and resources. Where "others" is frequently what's in western portfoliios.

There were things priced in, such as Xi Jinping becoming the General Secretary of CCP. However there were many other subtler signals that were genuinely surprising and shocking, one of them being Hu Jintao unceremonious removal from the CCP congress by Xi's bodyguard. Also the fact that no people from Shanghai clique or The Communist Youth clique received any significant positions inside the new administration.

The overall perception is that Xi absolutely cemented his position, removed anybody who opposed him in any - even superficial way - and most importantly he removed all economic reformers who wanted more open economy. Really disastrous news for Chinese people and The World at large in my mind.

I think you're on point. However the idea that an autocratic regime would move to tighten it's own grip on power by removing possible rivals and locking out upstarts shouldn't be surprising in any real sense given all of modern history.

I can count on maybe one finger an example of an autocrat who willingly surrendered their authority and allowed transition of power away from themselves or their allies in the modern era. I can think of like a dozen that went the other way once the opportunity arose.

I guess there was some nonzero probability that Xi stepped down and/or would allow some reforms to occur, and the market finally gave up on those when they didn't manifest.

CCP has famously opaque structure, so it was not necessarily even about Xi "voluntarily stepping down" but maybe being forced by some players to share some power or tolerate some ideas he opposes. The power struggles inside Zhongnanhai would probably fill whole spy libraries, it is insane what is going on in there. If you follow China watchers you will see lengthy analysis of things like what can be the meaning if Xi having two cups of tea in front of him when everybody else has just one. So even if to the outsiders some things like order of seats or looks of congress members may seem innocuous, it is the only signal available given that things like "voting" are well known sham.

Also it has to be said that Xi is only seventh leader of CCP after Mao Zedong and since the reign of Deng Xiaoping the CCP established the system of collective leadership exactly to prevent one dictator to amass power similar to Mao. So in fact it happened in the past that even leaders with total political authority capable of implementing superauthoritarian ideas like one child policy were sharing the power and they were willing to hand the power over to the next chairman. In exchange they had certain level of safety, respect and comfort after they transfered the power. The result of this congress shows that collective leadership is a thing of the past.

Chinese tech stocks fell 10%, apparently on the basis that Xi hadn't appointed more pro-market people. Hong Kong stocks are down 6% but Shanghai is only down 2%. There's more foreign money in Hong Kong obviously, so I suspect that's what's going on. I don't know what people were expecting, it's not like there was much chance that Xi would step down. It's pretty obvious that the new Cold War is on and the first proxy wars have begun, it's only that nobody prestigious enough has bothered to name it.

I was also curious - thought it was pretty clear Xi would stay and he had even hinted towards it many times over the last few years. Your comment makes much more sense to me.

Why wouldn't stocks already have priced in this event that everyone was certain would happen? Were investors assigning some high probability to Xi suddenly dying?

Dictators always follow the same pattern – start with breaking the two-term rule and then break the country.

A lot of places don't have a two term rule or anything similar, leading to prime ministers who sit 10-15 years and there are no issues. In short, I'm not really understanding the doom and gloom in your post.

All those places have serious issues.

Most places have serious issues.

I don't subscribe to the view that every country is basically the same. Serious issues in poor countries are much much worse than those in rich countries.

I agree completely. Where I don't agree is that if we just had voting booths and term limits, those problems would be in any meaningful way affected.

Netherlands, a famous hotbed of authoritarianism and dictators, currently has its longing serving prime minister in history surpassing 3 American president terms.

I don't know even his name. Apparently he is of no significance because the system is stronger than the leader. Very timely tweet from Tabeb in this regard: https://twitter.com/nntaleb/status/1584882478287757312

Stop complaining about the turnover in Britain. You don't seem to get it. It is much healthier and more stable than Russia, Saudi Arabia, and other nations that have NO turnover. The virtue of the system is that it does not depend on a single person

This is why we should abolish term limits if we want to protect America from dictators.

Ironically the PRC has been the opposite. From 1986 until 2018 the office of the president which is considered largely ceremonial had an official two-term limit while general secretary of the Chinese Communist Party does not have a formal term limit. Wikipedia seems to think that the general secretary post had an informal two-term limit after Mao (they mention it on Xi's bio page) in-spite of Jiang Zemin holding the post three times as well. Jiang might be categorized as dictatorial but that's going to be heavily influenced by Falun Gong aligned sources.

If the country has a term limit, and the leader breaks it, it's very likely they're going to move to be a permanent dictator. And most countries without term limits have weaker executives, where most of the power is in how the party votes in parliament, not in the executive themselves.

Saying that countries have weaker executives is irrelevant to the fact that there are people in power who sit there for years.

My country, generally considered one of the best in the world when it comes to democracy stuff, had a president who sat in office for 20 years. An office that had the executive power to refuse to sign laws into effect, which the president used more than once. During the same time the prime minister had held office for 12 years as such. You can play pretend and say that because the country is run by a parliament filled with political parties there is some wiggle room for... whatever it is you think is not 'dictatorship', but in reality, the prime minster was also the guy that had executive control over the biggest party in the country and was very buddy buddy with another party leader of a very big party which meant they had de facto complete control over the country. Having a weaker executive was irrelevant. These guys could do what they want, which they did.

I don't see why the label of 'dictator' is in any way relevant nor, still, do I understand the doom and gloom of your post or the implied optimism of alternatives.

Winnie-the-Panda getting a third term is not news, although it is an important event. The composition of the new PSC may be - Western media is saying that it is all "hard-liners" and this is unexpected. I am not an expert, so the only thing I can say is that the promotion of Li Qiang (who was responsible for the Shanghai lockdowns) looks like bad news, but I thought it was expected.

The ejection of Hu Jintao arguably is news. I don't know what it means though.

We can't tell how much of the market drop is reaction to the political news because there was a lousy economic data release at roughly the same time. FWIW the FT blames the economic data.

Winnie-the-Panda

What’s with this? We wouldn’t call Trump “The Orange Cheeto-in-Chief” here, just bizarre

If Donald Trump was aggressively censoring media comparing him to an Orange Cheeto, I would be calling him The Orange Cheeto-in-Chief at every safe opportunity.

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