The economy is not in good shape, everybody knows that, and so there was great anticipation, leading up to the Central Financial Work Conference held over the last few days in Beijing, with much discussion about what the top leaders would announce to rectify the situation. What came out of it was puzzling, largely ideological People’s Daily Marxist speak. “Unswervingly Follow the Path of Financial Development with Chinese Characteristics” summed up the message. The only clear thing that has come out of it is that the leaders have decided to centralize power and decision-making in the financial system, putting it directly under the control of the very top of the party leadership, above the organizations which had previously been in charge of managing crucial parts of the financial system, including the People’s Bank of China (the central bank) and the CSRC (China’s SEC). Hey, this may make sense, we don’t know, but the economists who we trust and admire, have mostly been talking about the need for opening and reform and a greater stress on private enterprise as a way of offsetting the problems the Chinese system is currently facing. But that is clearly not the direction in which we are going.
In the geopolitical sphere, however, things appear to be becoming more sensible, with more and more talking going on between the Chinese and the Americans, all leading up to what is now for sure going to be a meeting of Biden and Xi at the APAC meeting in San Francisco later this month. Talk is cheap but it’s certainly better than not talking at all.
Have a really good weekend.