Article / 17 October 2017 at 12:30 GMT

What to expect at the 19th Communist Party Congress — #SaxoStrats

Head of Macro Analysis / Saxo Bank
  • China's 19th Communist Party Congress to start Wednesday
  • Beijing remains committed to reforming state-owned businesses
  • Environmental programmes and innovation also in focus

Investors are looking to the Communist Party Congress for clues as to China's economic plans and upcoming programmes. Photo: Shutterstock

By Christopher Dembik

The 19th Congress of the Chinese Communist Party is, above all, a game of musical chairs aimed at strengthening the power of leader Xi Jinping, but it will also give precious indications as to the economic direction chosen by China. 

State-owned firms targeted

Let's first tune ourselves in to the political currents afoot... the major political move among Chinese senior officials should be the appointment of successful current anti-corruption chief Wang Qishan to the head of an entity devoted to restructuring large state-owned companies. 

This nomination is by no means insignificant, as it represents a reaffirmation by Chinese authorities of their will to fight overcapacity in state-owned industries. One can easily guess that Wang will show the same diligence and determination in his new top position as he did when he was at the head of the fight against corruption.

From an economic point of view, there is no major interest in focusing on possible Chinese growth targets for the years to come. What will really count is the emphasis qualitative over quantitative growth, which will increasingly take environmental aspects into account. 

In the green

A true green revolution has been taking place in China over the past few years: a year ago, there were almost no self-service bike systems in China. Today there are 100,000 public bicycles available in Beijing and 450,000 in Shanghai. 

In addition, the Party Congress should emphasise the need to go even further in the field of innovation where China quickly is becoming a world leader. All we have to do is to look at the powerful boost of high-speed LGV technology: 12 years ago, there was not a single high-speed rail line in the country. Nowadays, China has the world's largest network (60%) and even lines where speed can go up to 400 km/h. 

Economically, the Congress should confirm China's upmarket growth and its desire to see it occur in a context of environmental reform and innovation.

High-speed rail, Shanghai
 China's gargantuan high-speed rail networks stand as testament to the country's ability to realise far-reaching projects very quickly. Photo: Shutterstock

— Edited by Michael McKenna

Christopher Dembik is head of macro analysis at Saxo Bank


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