By Clay Chandler
October 28, 2017

Xi Jinping has emerged from the 19th five-year congress of China’s communist party in firm control of the world’s second largest economy. His “thoughts” have been enshrined in the party’s constitution. He has stacked the Politburo Standing Committee, the party’s most influential ruling body, with men who are loyal to him and, much as I predicted in last week’s CEO Daily, succeeded in excluding from that group anyone young enough to pose a threat to him as a potential successor.

I won’t rehash the profiles of the members of the standing committee. (You can find detailed assessments of the new leadership here and here and here.) I will note, however, that now the congress is over, Xi is, unquestionably, China’s most powerful leader since Deng Xiaoping. Moreover he has reshuffled party leadership in a way that leaves open the possibility he can remain in power well after his current five-year term as party boss expires.

In the wake of the congress, many have argued that Xi is the most powerful Chinese ruler since Mao Zedong. The Economist, in a jab at at US president Donald Trump, declares Xi to be the most powerful leader in the world. Not everyone agrees. The Financial Times’ Tom Mitchell has penned a smart piece debunking claims Xi is more powerful than Deng. My old boss David Ignatius, one of the shrewdest foreign policy analysts I know, contends Xi is far more vulnerable than he appears.

Either way, there’s no doubt China now has a leader who is large and in charge and, as veteran China analyst Ian Johnson points out in this excellent essay, pushing an expansionist vision of China’s role in world affairs.

For foreign business leaders, Xi’s ascendance poses at least three important questions:

Now that Xi has consolidated power, will he seek to tighten the party’s grip on China’s economy or will he feel sufficiently confident to step back and allow greater autonomy for markets and private firms? My guess, for what it’s worth, is that Xi intends the former. Don’t expect a reversal of China’s crackdown on aggressive outbound investors such as Anbang Insurance Group, HNA Group, Dalian Wanda or Fosun International. Do expect government support for expansion of the role of state-owned enterprises in China’s economy.

If Xi tightens the party’s grip on China’s economy, will it help or hinder growth? Undoubtedly the latter, but as the Economist argues persuasively in its current issue, meddling by Beijing won’t be enough to stop the dynamism of China’s private sector.

Over the next five years, will China offer greater or fewer opportunities for global firms? Greater, as long as China continues to grow—and therein lies the dilemma for many global, and particularly for American, business leaders. Under its new, more powerful chairman, the Communist Party is likely to intervene more vigorously than ever in structuring the terms under which foreign firms are granted access the Chinese market. And yet, the Chinese market will remain too large and important for foreign businesses to ignore.

President Trump has promised to press Xi for improved market access for US firms on his visit to China in November. His commerce secretary, Wilbur Ross, predicts “decent deliverables” on trade from Trump’s trip. But as China’s new helmsman grows stronger, he has less incentive to make concessions. In comments to the New York Economic Club on Wednesday Ross acknowledged that the two nations aren’t likely to resolve their long-running differences on forced technology transfers and intellectual property safeguards anytime soon.

More China news below.

Clay Chandler
@claychandler
clay.chandler@timeinc.com

SPONSORED FINANCIAL CONTENT

You May Like