.jpg)
We are closely watching China’s annual National People’s Congress meeting as the biggest parliamentary reshuffle in years is expected, alongside a modest reduction in annual economic growth forecasts. With global growth stalling post the pandemic bounce, China is seen as a key force in stimulating further progress since it reopened from a zero covid policy.
Having secured an unprecedented third term as leader, President Xi Jinping will set out how his power will be further consolidated and what the key government policy goals will be.
This comes at a time of rising tensions between China and the US and Xi has replaced a generation of internationally respected economic officials with politicians better known for strong ties to the president.
Creating stability is a key focus as China wrestles with a fragile economic recovery, and the increased tensions with the US. Early signs of growth since zero covid restrictions were lifted may help restore internal faith in the country’s social contract — the promise of prosperity in exchange for fewer freedoms. Sustaining that momentum is considered critical for Xi who faces an increasingly sceptical public and even sporadic protests over the fallout from his pandemic management. More stability at home could allow China to take a harder line on other issues including the democratically governed island of Taiwan, which Beijing regards as its own territory.
While US President Joe Biden’s administration expands restrictions on China’s access to strategic technology, China has so far resisted retaliatory moves but if Xi can successfully calm down the uncertainty at home, that may well increase his appetite to take on more risk abroad.
This was seen yesterday with Xi warning CATL (the Chinese based world leader in electric car battery production, having provided more than 37% of all global electric vehicle batteries in 2022), that he was “happy and worried” by CATL’s market leadership. According to local news, Xi stated “nascent industries should figure out where the risks are and avoid penetrating deep into enemy territory alone, only to be caught up by others and then be wiped out”. The inference was that the group was building a reliance on raw materials from other parts of the world at just the time that tensions between the US and China were building. Car manufacturer Ford stated only last month that they were commissioning CATL to make lithium iron phosphate batteries at a $3.5bn plant in Michigan.
Global competition in this area is building and many European companies are being drawn to the US after President Biden’s Inflation Reduction Act promised over $369bn of subsidies and tax incentives for the production of green technology. Volkswagen have even paused a planned battery plant in Eastern Europe to instead prioritise a similar plant in the US as it suggested it could receive as much as $10bn in US incentives.
We continue to watch this with great interest, for the direct investment opportunities as well as for the wider stimulus that could help sustain global growth through 2023.
In news closer to home, we are delighted to announce that Darnells Wealth Management has been awarded the prestigious corporate Chartered Financial Planner status from the Chartered Insurance Institute. Chartered status is a symbol of technical expertise and reiterates our public commitment to the highest professional standards. Well done to the team and thank you, our clients, for all of your support.
Do have a good weekend.
Comments