One City, Two Systems

Lee addresses over 200 financiers without a mask

The Global Financial Leaders' Investment Summit has kicked off just as Typhoon Nalgae approaches Hong Kong to cause the observatory to raise the T8 signal; all the top bankers are ensconced in the ballroom of the Four Seasons Hong Kong -- sans masks.

Practically no one attending the event is wearing a mask when anyone else outside the ballroom must wear one. And even Chief Executive John Lee Ka-chiu was maskless in the room. 

Fang says investors should not bet against China

Such is the double standard of the Hong Kong government in its desperate bid to tell the world the city is open for business.

"Don't bet against China," said Fang Xinghai, a vice chairman of the China Securities Regulatory Commission in a recorded message for more than 200 top financiers. 

"International investors [should] find out what is going on in China by themselves, and don't bet against China and Hong Kong."

Guess Fang couldn't make it in person to Hong Kong because it's so troublesome to return to the mainland? And how can foreigners go to China to see for themselves with such extreme Covid-19 measures? 

"As President Xi Jinping underscored during the 20th party congress, China's doors can only [open] bigger, and Hong Kong will play a very important role in the overall opening of China's economy and Chinese financial sector."

Only hotel staff wearing masks in the room

Also Fang's boast that China's doors can only open "bigger" going forward is akin to a pie in a sky, pigs can fly kind of notion. Xi did not mention anything about opening up anytime soon or focusing on the economy.

Fang even had the gall to say international media don't understand China very well so investors shouldn't read too much into it.

Wonder what the few foreign journalists left in China, like the BBC's Stephen McDonnell has to say about that.

Perhaps just as bad were some bankers lining up to prove they've drunk the Kool-aid.

UBS Group AG chairman Colm Kelleher was reported by Bloomberg as saying he doesn't read the American press and is "very pro-China." 

"We actually buy the story, but it's a bit waiting for Zero-Covid to open up in China," he said.

Kelleher claims to be "very pro-China"

He's insinuating they are literally waiting at China's doorstep for them to twist the door knob and open the door...

With China's economy floundering, and the banking and property sectors on shaky ground, foreign bankers are still bullish on China? Seriously?

Shows how much they love money more than anything else.

They may have to wait a while longer... possibly 2025?

HK Stocks React to Xi

Xi and Politburo move markets in a downward direction

How did Hong Kong react to General Secretary Xi Jinping's extension of power for at least another five years and his seven-man Politburo lineup?

The Hang Seng Index plunged over 700 points to drop below 16,000 points, a 13-year low. The index fell 4.4 percent to 15,494. 24 at 11.01am local time, the lowest level since May 2009. There was a major sell off of tech stocks, with Alibaba Group falling 8.8 percent to HK$63.50, a record-low close, and Tencent Holdings slumped 7 percent to HK$216.80. Meituan slumped 9.5 percent to HK$128,10.

HSI plunged below 15,000 in 13 years

Developer stocks also dropped, with Longfor Group falling 9.4 percent to HK$17.30 and Country Garden lost 7.7 percent to HK$1.32.

In his report to the Congress, Xi called for "regulating the mechanism of wealth accumulation", signalling a tighter oversight of private capital following months of crackdown on tech companies, while also pushing his vision for "common prosperity" in a bid to close the wealth gap in the country.

China's economy grew only 3.9 percent in the third quarter when it had projected 5 percent, demonstrating a lack of consumer confidence in the retail sector, which only grew 2.5 percent in the third quarter.

Does Xi even care about economic numbers? This slide backwards is a rebuke to what Jiang Zemin/Zhu Rongji and Hu Jintao/Wen Jiabao did in the past 20 years.

Unless Xi has an economic miracle up his sleeve, stocks are going to sink further.

Xi's Loyal Lineup

The men who will be in charge of China were revealed today

A day after former president Hu Jintao unceremoniously left before the end of the National Congress of the Chinese Communist Party, Chinese leader Xi Jinping revealed his Politburo Standing Committee which left China experts' tongues wagging.

Looking at the lineup, it's not about competence or a diversity of opinion, but fierce loyalty to Xi that trumps all.

The biggest shocker is that Premier Li Keqiang will be replaced by Li Qiang, 63, who was the Party Secretary of Shanghai. 

Xi chose those most loyal to him in Politburo

He bungled the Covid-19 outbreak in Shanghai, which resulted in the city being locked down for more than two months and people complained of not having enough food to eat. 

Surprisingly Li was not sacked because of his close relationship with Xi, and his influence as Party Secretary of Shanghai.

The two go way back to 2004 when Li was Xi's chief secretary in Zhejiang province, and Xi promoted him to governor of the province when Xi became President in 2013.

It's quite concerning that Li will be in charge of the country's economy, but with zero-Covid still in force, perhaps he won't be expected to meet unrealistic targets.

Others in the lineup: Zhao Leji, Wang Huning, Cai Qi, Ding Xuexiang, and Li Xi.

Zhao is head of the Central Commission for Discipline Inspection, reporting on several officials for corruption over the years. When he was 42 years old, he was the youngest provincial governor when he was governor of Qinghai.

Shanghai's lockdown was chaotic and shocking

Wang has an academic background, and was the brains behind many Communist Party concepts, such as the Three Represents of Jiang Zemin, the Scientific Outlook on Development of Hu Jintao, and Xi Jinping Thought. It is believed the Belt and Road project was also Wang's idea.

Cai is currently Mayor of Beijing, and his success of hosting the Winter Olympics earlier this year in a closed loop earned him brownie points. But in 2017 in a bid to reduce the capital city's population, he kicked out many migrant workers who were living in the outskirts of the city.

Ding is a trained engineer and one of Xi's closest confidants. He has worked as Xi's secretary since 2007, and seven years later became head of the presidential office, similar to chief-of-staff.

Li is Party Secretary of Guangdong Province where he pushed for the development of the tech industry and economic reforms. 

Should we be surprised there are no women in this powerful policy-making body? For a country that claims "women hold up half the sky", it doesn't seem to trust or believe women are capable of doing the job...

Former President Hu Escorted Out

Hu escorted out of the Great Hall of the People as Xi watched

The 20th National Congress of the Communist Party of China is wrapping up -- but not without some drama.

Sitting next to President -- or rather -- General Secretary of the Party Xi Jinping was his predecessor, former president Hu Jintao. 

One would think sitting next to the big guy would mean Hu was in Xi's good graces, but just the Chinese leader was about to give his closing remarks on the congress, a steward came by to tell Hu it was time to leave.

Hu has a word with Xi and Li before leaving

Hu, looking much older with his naturally greying hair, refused to move at first, and the steward practically had to hoist him up. Xi acted as if nothing was wrong as Hu was carted off.

China experts are completely agog at what happened, but it has been long known that Xi didn't think much of Hu's Communist Youth League, which is supposed to pick out and groom young people for the Party.

Xi has basically dismissed the CYL, saying that "All they [cadres] can do is just repeat the same old bureaucratic, stereotypical talk", thus curtailing Hu's influence.

And today seems like the final straw -- literally forcing him out of the room in front of everyone.

Other surprises are afoot -- Li Keqiang, Li Zhanshu, Han Zheng, and even Wang Yang are not included in the new lineup of the Standing Committee.

There were predictions that Li Keqiang would stay on in the committee but would step down as premier in March, but looks like he's been completely shut out. He was pretty much sidelined the entire 10 years anyway. 

Li Zhanshu is 72, so well past retirement age.

Wang was to stay in Standing Committee

Han Zheng was Vice Premier of the State Council and Standing Committee, and is 68 years old which is time for retirement. He had been the leader of the Central Leading Group on Hong Kong and Macau Affairs since April 2018.

Wang Yang at 67 years old was expected to stay on and not only was a member of the Standing Committee, but also Chairman of the National Committee of the Chinese People's Political Consultative Conference. He may have been ousted as he was a vice premier in Li Keqiang's cabinet?

This means Xi has kicked out more people he either doesn't like or trust, and will put in at least four of his own people, who will be revealed tomorrow.

The fact that this was all sorted out in August is quite the feat for Xi, and demonstrates his unchallenged power not only in the Party but also the country.

This does not bode well for China, as it means a continuation of zero-Covid at the expense of the economy, and could also further increase tensions across the Taiwan Strait which no one needs now, in particular Taiwan.