The Chinese Communist Party has held only 20 party congresses in its history, one every five years, and few as notable as the just-concluded meeting at which President Xi Jinping claimed his unprecedented third five-year term. In a two-hour address, Xi aggressively signaled that China will focus on national security, invest in a âworld class military,â âdevelop unmanned, intelligent combat capabilities,â and unrelentingly pursue the takeover of Taiwan under the banner of âreunification.â All this against a backdrop of asserted rising external threats from the West and a forecast of âhigh winds, choppy waters and dangerous storms.â
It did not take long for Chinese investors to react. On Monday, the Hang Seng plummeted 6.4% (equivalent to a 2,000 drop in the Dow Jones index), for the largest one-day drop since November 2008. The index is down 42% for the year and within 2% of its 52-week low. In the tech sector, e-commerce giant Alibaba fell 10%, bringing its losses to more than $600 billion since it peaked in October 2020. Chip stocks are being dumped in response to expected U.S. export controls. The property sector is facing unrelenting pressure from massive over-building and excess debt. Chinese entrepreneurs are leaving the country. Official and unofficial accounts track massive movements of capital to havens outside of China. All in all, quite the contrast to President Xiâs boasting rhetoric of âthe great rejuvenation of the Chinese nation.â…
