China 20th Party Congress First Update

The week long party congress commenced this past weekend and will not conclude till October 22nd. Note it is early in the meetings and this is our first, initial impressions of the information released thus far. There is more important potential information will likely be revealed later in the meetings.

Firstly, national security and social stability seem to have become more important, including the resilience of supply chains which of course is a global trend.  For example “Chinese people must hold their rice bowls firmly in their own hands”.  Our theme “Security is the New Watchword” released some months ago already echoes these trends in energy and food security. National sovereignty in terms of supporting the “One country, Two systems”, was also reiterated. This was in-line with expectations.

Secondly, economic development remains a strong focus, in particular, the quality of growth rather than quantity. A highlight on the focus on the real economy and raising total factor productivity. Finally, a continued consolidation in the state sector while continuing to encourage, support, and importantly guide the private sector development. This emphasis has been increasingly seen in the past few years, so again, no surprise here.

Thirdly, as the success of zero-Covid was highlighted in the speech, this policy goal was largely as expected. The speech pointed out no immediate loosening of this policy. We continue to monitor incremental, gradual loosening of policies.

For those expecting any major changes, not ourselves, thus far the information is largely in-line with the tone ahead of the conference. We will keep you posted on future developments. A primary focus will be on the makeup of the new Politburo.  Any new development on economic measures could come later in the year.