China’s President Xi Jinping waves after his speech following an inauguration ceremony for the city’s new leader and government in Hong Kong on July 1, 2022, on the 25th anniversary of the city’s handover from the UK to China.
Selim Chtayti AFP | Getty Images
According to veteran investor David Roche, President Xi Jinping will have to face several of China’s biggest economic challenges after securing an unprecedented and long-awaited third term.
Roche said Xi will most likely “navigate” his confirmation as China’s top party chief at the next meeting of the National Congress, which lays the groundwork for securing another five-year term as the country’s leader.
There will be no “real resistance against him at the highest levels of the Communist Party,” he added at the party’s Congress meeting later this year.
“It faces many challenges. Not only the external challenges of Taiwan, which is certainly not getting closer to China, but it faces economic challenges,” said Roche, president and global strategist at Independent Strategy. on CNBC’s “Squawk Box Asia.” ” Thursday.
China’s economy is slowing with growth likely to settle at around 3% to 4%, he said, adding that it is “partly conditioned by the legacy problems of debt and bad assets and partly conditioned by demographics and very poor productivity”.
China’s growth weakens
Goldman Sachs also cut its forecast for the MSCI China index due to a worsening decline in China real estate market. The investment bank cut its earnings outlook for the index to zero growth for the year, down from 4% previously.
Roche said China’s economy is struggling with a “huge real estate problem and banking problems.”
Yes [Xi Jinping] is going to complete his mandate, he must really make progress in… social peace. And I think it’s a big, big challenge.
“You’ve seen it in people trying to get their deposit back. You’ve seen it in people refusing to pay their mortgages, which is affecting the very concept of common prosperity, which is [Xi’s] main ticket,” he added.
Xi initiated the concept of “common prosperity” last year, which is generally understood as moderate wealth for all, rather than just a few. But it remains a vague and frequently used slogan.
Xi’s vision for the next term
Wednesday, China’s state broadcaster CCTV reported Xi he made the comments at a special two-day meeting in Beijing, where he laid out his vision for “the next five years”.
Xi said the meeting of the Communist Party of China congress will offer “a two-stage strategic plan for China’s drive to build a great modern socialist country in all aspects, and in particular will outline plans for the strategic missions and main measures in the next five years”. years”.
“Xi called for efforts to focus on addressing unbalanced and inadequate development, and work on new ideas and measures to address the problems,” the broadcaster said.
There’s no doubt that Xi will be confirmed, Roche said, “but if he’s going to complete his term, he has to really make progress on … social peace. And I think that’s a big, big challenge.”