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China at a crossroads

by David McWilliams, David McWilliams:

Have you been following the murder trial in China, where a British businessman was allegedly killed by the wife of a man who was until recently tipped for political greatness? His fall from grace on corruption charges has been made far more vertiginous by the trial of his wife. You can’t say they don’t know how to destroy political opponents in China.

The trial, for those people who watch closely, is all about the power struggle at the heart of the Communist Party to see who is going to be the next Emperor and, possibly more importantly, who is going to be whispering in his ear.

As we wrote here in the column in June, the background noise to this power struggle is a slowing economy. The Communist Party need economic growth because, having dropped all their Maoist rhetoric, all they have is economic growth.

“Equality for all” has been replaced by the slogan of “prosperity for all” and if they don’t deliver they are toast. So the party will do whatever it takes to get economic growth going again. Unlike Mario Draghi, when the Politburo says it will do whatever it can, you can rest assured that it means it.

For foreign investors, who should be mindful of the quip that “you can make anything in China except money”, the slowdown should be watched carefully.

Read More @ DavidMcWilliams.ie

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